CLP Holdings Limited Stock

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 Chiang; and our Chief Financial Officer, Mr. Alex Keisser. 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 2. And today's agenda, we'll 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.

Yes. Thank you, Marissa. So good afternoon, everyone, and thank you for joining us. Now 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 centers and accelerating energy transition. Our performance reflects 3 consistent themes. First, our 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 decarbonization milestone with the sale of Jhajjar coal plant. We delivered capital-efficient funding through our inaugural Panda bond issuance, enabling self-funded structure for our Chinese Mainland renewables platform. And we continued 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 HKD 5.7 billion. Total earnings have risen 7% to nearly HKD 6 billion on the gain of Jhajjar sale. The Board has recommended a second interim dividend of HKD 0.63 per share bringing total interim dividends to HKD 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 wealth 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 sendouts and capacity declined marginally, a result of our exit from Jhajjar. I'll 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 or EBITDAF, increased by 9% year-on-year to HKD 13.6 billion. Operating earnings before fair value movements increased by 10% to HKD 5.7 billion. Adjusted for the fair value movements and items affecting comparability, total earnings were close to HKD 6 billion, an increase of 7%. Capital investments of HKD 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 2026 was HKD 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 optimization 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 favorable compared to a year ago. Together, with a HKD 356 million contribution in items affecting comparability, primarily the gain on Jhajjar divestment, total earnings rose to nearly HKD 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 HKD 4.8 billion. Earnings growth reflected continued capital investments, expanding the asset base together with lower interest cost on a lower rate environment and proactive refinancing.

We invested HKD 4.8 billion of CapEx, the majority in transmission and distribution, supporting Northern metropolis development, data center expansion and grid upgrades. On demand, local electricity sales rose 3.6%, reflecting stronger economic demand. Data center demand grew close to 12%. And transport electrification continued to accelerate reinforcing their roles as key structural growth drivers.

Looking forward, our HKD 52.9 billion development plan remains on track. Near term, we are expanding infrastructure for the Northern Metropolis and data center connections alongside continued grade reinforcement. As the Hong Kong government developed its first 5-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 0 carbon imports over time.

On supply security and tariffs, our policy remains resilient despite global volatility underpinned by diversified fuel mix. Higher international fuel cost 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, I mean softer economic demand and renewables building out ahead of grid and storage capacity. Against this backdrop, operating earnings held broadly stable at HKD 899 million, as nuclear reliability and renewable capacity additions absorb tariff pressures and renewable curtailment. Nuclear contributed positively with strong generation and reliable operation at Daya Bay and Yangjiang. Renewables also contributed positively as 5 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 costs. Looking ahead, we're executing our transformation program, which TK will cover later in the presentation.

We do expect continued market exposure to weight on Yangjiang's earning 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 Panda Bond Program and a clean energy fund now in development. New earnings will be underpinned by long-term fixed revenues through mechanist tariff, corporate PPA and green energy certificates. The pipeline remains healthy with close to 1 gigawatt in execution, including CLP China's largest wind projects to date.

To Energy Australia. Operating earnings were up 22% to HKD 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 Yallourn, 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 Lake Lyell gain also shaped the results. The customer business saw improved margin on the tariff 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 multiyear 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 6 months, reflecting additional renewable and storage capacity, milder weather and sure supply disruption 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 view remains constructive, underpinned by electrification, data center load and the pace of coal exit. Against that backdrop, the reliability and flexibility of our portfolio and our transformation program is central to mitigating the changing market conditions. The transformation program is a deliberate cost out, targeting around HKD 250 million of enterprise cost savings by 2027 from the current cost base excluding customer platform transformation costs and benefit.

And on flexible capacity, we're advancing close to a gigawatt of new battery and pump hydro with Wooreen and Hallett batteries under construction.

Moving to Apraava. The completion of Jhajjar sale marked a strategic milestone. Our Indian non-carbon platform continues to scale, with operating earnings up 41% on to HKD 105 million, so lifted by one-off items. Thermal contribution was lower as Jhajjar contributing 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 nonrepeat of last year's KMTL impairment. AMI earnings held steady, but with lower-than-planned revenue realization due to delayed project execution. And group adjustments and corporate expenses were lower, reflecting interest income received on delayed payments, thanks to the resolution of the nonoperational Paguthan dispute.

With Jhajjar now exited, Apraava's earnings mix shifts fully to noncarbon, contracted, regulated and scaled into Indian'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 2 new transmission projects of roughly HKD 4.5 billion, adding to our platform of long-dated revenues. And finally, smart metering continues to scale with nearly 3.7 million meters installed with rollout continuing across 7 states.

Turning to Taiwan region and Southeast Asia. [Foreign Language] 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 inflow were healthy at HKD 8.8 billion, up HKD 1.7 billion, driven by higher EBITDAF from all business units across the portfolio together with proceed from the Jhajjar divestment. Total cash outflow were HKD 11.8 billion, made up of HKD 7 billion of capital investment and HKD 4.9 billion of dividends payment. Of the capital investment, HKD 5.3 billion was directed to our Hong Kong SoC business and HKD 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 a 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 HKD 20 billion of available facilities. We were active in the debt markets. The team successfully refinanced around HKD 9 billion banking facility and medium-term notes for the Hong Kong SoC business and competitive credit spread. CLP China issued its inaugural 3-year RMB 1 billion Panda Bond to fund renewable growth and Energy Australia refinanced into a large AUD 600 million syndicated facility. Our debt profile remains well structured. Maturities are well spread with a balanced mix of 50% fixed and 50% floating rate. Our prudent financial management continues to be recognized by rating agencies, S&P's and Moody's reaffirmed our strong investment grade rating for CLP Holding, 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.

Yes. Thanks, Alex. Now the results Alex has walked you through, show a group delivering with resilience. That's the foundation from which we are executing our strategy. Now let me start with our regulatory business in Hong Kong. Our approach is consistent and deliberate. Invest in long-life infrastructure funded with discipline and grow our regulated asset base in step with the structural demand of a modern economy. Three things that define that strategy. First, a stable regulatory regime. The scheme of control framework has stood for over 60 years, providing predictable returns and dependable earnings that are fundamental to our strength.

Second, long-term infrastructure investments. The HKD 52.9 billion 5-year development plan anchors the CapEx and Hong Kong's growth agenda with a major focus on expanding the power system to meet demand from data centers and investment of HKD 2.5 billion for the initial phase of Northern Metropolis build-outs. 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 5-year plan, reinforcing the long-term durability of our Hong Kong business.

Now 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 with form-driven tariff pressure, a supply-demand imbalance and integration lacking the pace of renewables growth. We are calibrating to these conditions, focusing on 3 things: to lift the quality of the platform as we execute towards 5 gigawatts 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 HKD 100 million of saving 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 built 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 the Clean Energy Fund in development with further enhance capital efficiency. The National Energy transition is a powerful tailwind, 240 to 320 gigawatts of renewable energy per year, RMB 5 trillion of grid investment and 300 gigawatts of storage by 2030. Our shift towards a disciplined, self-funded and returned net platform positioned us to capture that opportunity. Now in India, our profit growth is now about scaling a noncarbon platform in one of the world's fastest-growing energy markets.

With Jhajjar now sold, our earnings mix is built firmly around renewables, transmission and smart metering, while we continue to explore adjacencies like C&I and batteries. Our ambition is around 9 gigawatts of noncarbon capacity by 2030, building into India's national target of 500 gigawatts. Progress has been sound in highly competitive markets. No new bids were won in the first half, but post period end, we secured 2 new transmission awards, roughly 800 megawatts equivalent. Now that is in line with our ambition of roughly a gigawatt of growth a year, and it reflects our discipline. We bid only where returns and risk 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. Apraava 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 to firm renewable output, capture the widening day time to evening price spreads and support reliability through the peak. We have an executable pipeline of high-quality projects targeting around 3 gigawatts by 2030, delivering across 4 dimensions. 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 schemes, which supports project economics.

Our partnership models on large projects delivers capital efficiency and enhance 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 megawatts of flexible capacity through an offtake arrangement. Hallett and Wooreen 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 Yallourn sites. While the retirement of the Yallourn 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 transmission at 220 and 500 kilovolt, secure water access and a skilled labor workforce.

We are exploring a range of development pathways centers on the growth in large-scale data center demand. The initial configuration includes up to two 1-gigawatt data centers with scope to expand over time as demand develops. Supporting energy infrastructure would be developed progressively, including battery storage and dispatchable firming generation using infrastructure already in place. Now these are early stage. Planning approvals and community consultations are still ahead. We will assess each pathway on its own merits. The value in the loan is optionality, a way to extend the infrastructure we own beyond the coal plants live as and when the economics support it.

Now before I hand over, let me bring this together in terms of what we believe makes CLP a compelling investment. Our proposition rests on 4 pillars. Built by 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 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-fund 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'll 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. [Operator Instructions]

With that, let's begin. We'd love to hear from you Lau Pierre, if you can hear me. Go ahead and ask your question.

And firstly, congratulations for your first half results. I have 3 questions. The first one is about dividend. So I can see that in the first half this year, you reduced your CapEx by 11% year-on-year. Free cash flow also increased year-on-year. So it seems without increased your TPS. So why don't you increase the TPS in the first half? And I remember in the last 2 years, you also increased the TPS by HKD 0.05, 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 in your retail customer business turned 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 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?

Yes. 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 sustainably growing. So at the end, it will be the Board's decision on determining the level of dividend. And we are -- 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, so 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 VDO and the DMO coming out has been reduced. Now -- but that's because of the reduced -- the reduction in the wholesale market. So that's why the VDO and DMO actually came down. So -- but more importantly, I think for retail business, it's all 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 it's how do we improve our business.

So we are now undergoing transformation by outsourcing our back-end office to Tata Consulting Services. So last year and this year, a period where we are doing this transformation and we do see benefits coming out this year and then more benefit will materialize next year and in '28. But regarding your wholesale, your point about wholesale price, I think that could even be more important because I think in terms of the changes in the market regarding weather condition being much milder this winter, more storage project has come online. So the -- basically, the volatility -- 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 coal generation, we do see support to our -- 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, in -- for our Wooreen battery projects, we successfully found a partner to invest in the project. But then at the same time, we have a like a PPA arrangement from the asset owner to Energy Australia. So that will not only make the capital more efficient from Energy Australia perspective, but also help us obtain more opportunity to increase the return in this market.

Thanks, T.K. Next question from our analyst is from JPMorgan, Vento. Vento. If you can hear me, go ahead and ask your question.

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, do we have any update on discussion or playing on like the next development plan starting from 2028? And also, do we have any updates on our view on the potential Mainland nuclear investment by CLP? So that's the first question. On the second question, so we saw from our first half results, our wind -- Chinese mainland results. So for the wind business, although we saw some curtailment and tariff impact, we actually see meaningful increase in the operating earnings of the wind segment.

So going into second half or into next year, so how should we think about the renewables profits from Chinese Mainland? And the third question would be on our nuclear plant in China. So we saw 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 second half and also next year?

Yes. 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 decarbonization target as set out by the Hong Kong Government in the Climate Action Plan 2050. So by 2035, we need to achieve 60% to 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.

Now I think the studies still continue. I think it also depends on the government dialogue with the Mainland authorities. But at the same time, you may be aware that the Area 136 in Tseung 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 reclamation, and we are working very closely with the government on progressing the projects.

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 it's about -- in the first half, it's about 15%, which compares 9% last year. So we do see some increase in curtailment, which would be due to either technical -- super technical reason because of the grid constraint or because of supply-demand imbalance.

So going forward, actually, in China, our focus is to make our business more competitive. So we are now also doing a transformation in China. Basically optimizing the core, centralizing operations with share service structure. 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. At the same time, we will be going over value than 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 projects where our costs 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, Daya Bay and Yangjiang are quite different. Daya Bay is more like a cost base return because there is 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. Now for Yangjiang, so because of higher reliability in the first half so 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 Yonghua from HSBC on the line.

And I would like to ask 2 questions. So I would like to ask about EA's plan to monetize the Yallourn 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 entrants into the Vietnamese 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 local Metropolis project in the future?

Yonghua. Now for EA, I think for the Yallourn 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 size that we can develop into a powered land for data center. So that's the current thinking. And the initial phase could be building two 1 gigawatt kind of scale of data center together with battery store range because we will basically power the data center with renewable energy that we purchase and then combine with the battery store rates, we make it more affirmed renewable energy supply.

And at the same time, we are also thinking about gas generation, which can provide fast response and also back up capacity to further support the power supply for the data center development. So I think that's more the current thinking. But I think currently, it's still in a very early stage. We have not worked out the exact so-called 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. Now regarding the breakdown of the -- no, I think the second question is more the new investment, right, in the region. They are growth markets.

And I think near term, we are more focusing on Taiwan region because in Taiwan, the regime is very mature. We have PPAs with Tai Power. We have also corporate PPAs with big corporations, in particular ITN, TSMC. 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 the -- for example, in Vietnam, I think the market is also developing. There are new regulations that are favoring corporate PPAs which we think is good. So we are also monitoring the development of the regulation closely.

I think the third one on CapEx, yes, for Northern Metropolis, I think we've seen the current development plan, the total CapEx is about HKD 2.5 billion. So it's basically spend across the whole development plan period from '24 to '28. Beyond '28, it will be the next development plan, which, as I mentioned at the beginning, we still have not so far started the preparation yet. So I think the discussion with the government will only be carried out in early '28 or if not end '27. So I don't have any particular information that I can share.

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.

And it is encouraging to see CLP's results grew in the first half of 2026. I have a question related to the Hong Kong business. Could you please provide further details regarding the Tseung Kwan O zero carbon power receiving terminal? We would like to note the projected CapEx scale 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 project CapEx will likely to be covered under the capital expenditure envelope of the next 5-year SoC development plan? Could you advise whether this will hold?

Okay. Thank you for the question. Now for the so-called zero carbon receiving station in Tseung Kwan O that will be built in the area 132. As I mentioned, because this is to fulfill the targets set by the Hong Kong Government in the carbon -- in the Climate Action Plan 2050. So by 2035, we need to have that zero carbon energy. So that means it's still quite a long time ahead. Building such kind of a facility, the building time actually 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 plan from 2029 to 2033, I think that will be the time that will capture most of the CapEx of the project if there are any. Because of 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, out of the 60% to 70% zero carbon energy, majority will be nuclear but then the government also specify about 7.5% to 10% will be renewables. So some of those renewable energy will be from local. For example, Hong Kong Government is developing the waste-to-energy facilities in Hong Kong and CLP is also doing feed-in tariff. So we have actually more than 400 megawatts rooftop solar already in Hong Kong.

So all these are like local renewables. But in order to fulfill the 7.5% to 10% renewable energy. So we need additional projects. So -- but that could be fulfilled either locally or through this new zero carbon import. For example, actually, a few years back, CLP did propose building the offshore wind farm in Sai Kung. Now at that time, the government thinks that the cost of that wind farm is still high, and they foresee costs will come down over time. So that's one possibility. But obviously, importing renewable energy from the Mainland could also be another option. So we'll see when we have more information. But for renewable energy input, actually, the lead time is even shorter because for example, building a wind farm, it could be like 2 to 3 years, importing renewables from the Mainland also the lead time will be shorter. So I think the focus is more importing nuclear rather than talking about renewable in the short to medium term.

We have Rob Koh, Morgan Stanley. Thanks for joining us from Australia.

Yes. 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 center precinct that you have announced, which looks very exciting. I guess just to try to understand the opportunity for CLP and that opportunity.

Could you maybe comment on whether developing the data center helps you to defer rehabilitation? Or is it mainly about the power development that comes with that, seeing as Australia as it bring your own power requirement coming. And then finally, if you know, it's very early days, but if you could comment on availability of fiber in that area and if you are proposing to join, I guess, the Telstra Aura Network?

Thank you for the question. Now for the Energy Australia transformation, the -- I would say the progress has been good. It's pretty much on track. So our plan is to basically spending some costs last year and also this year and then generally benefits from this year onwards. Majority of the benefit will come next year and '28. So our current assessment is that this transformation can bring down the back office costs, the overhead by about HKD 250 million in basically next year based on the current cost base. So I think that's pretty much on track.

Now for the building platform, we are in an advanced stage of developing this. 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 2.5 years to complete. But the benefit actually will only materialize when the project is completed. So that's about transformation.

Now for the Yallourn Energy Security Precint, I'm also very excited about it. I think the opportunity -- as I mentioned, I think it's still in a very early stage. The initial idea, obviously, is development of the site itself is already something that can add value to the business.

But as I just mentioned, what would be the -- like 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 market. But I think, at least, as you mentioned, providing power, for example, through long-term PPAs, definitely is a core value to this project. But whether there will be other opportunity, I think we will do more study to try to identify.

On the question of whether it delays the exit of Yallourn?

No, at this moment, I don't think there will be any sort of delay of exit of Yallourn, then we have an agreement with the Victorian government on closing Yallourn in middle of '28, and there has been no discussion about so-called extending or delaying the closure of the power station.

We have Pierre here with a follow-up question from Citi.

Just one simple question. So regarding the data center projects, potential to be built at the Yallourn site. May I confirm that it will not be invested by CLP. It will be invested by third party. Is it correct?

Pierre. No, as I mentioned, the business model, we still have not come to a conclusion. It's still in the very early stage. We are going to do some new market sounding but EA being electricity, I would say utility, obviously, we will be looking at the electricity service first, but I think we will be -- we will keep an open mind about the business model of the data center development.

We do have one question online from [indiscernible], Bloomberg Intelligence. He's asked about nuclear, which I think we've answered quite comprehensively, but maybe 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 context or war basically resulted in very volatile international fuel market prices. And in different markets, actually, there are different impacts. Now 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, 1/3 from nuclear, and then the rest coal. So gas will be the major fuels 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 3 sources of gas, 2 from the Mainland and 1 through LNG from the global markets. In terms of supply, I would say we are slightly impacted because of the LNG supply, there have been some issue. But overall speaking, we do not have any problem of having sufficient supply to -- for generation in Hong Kong. Now in terms of price, because of the linkage with oil -- Brent oil price, so there will be some changes in the gas price.

But because of the design of those contracts, they are taking like rolling average of the oil price. So there will be some lagging effect and smoothing effect of the gas price out of this volatile oil price market. And at the same time, we will also pass through all the costs to the ongoing customers through a monthly fuel cost adjustment mechanism. 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 -- ensure sufficient supply to ensure reliable energy 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 also mindful about the potential impact on gas. But in Australia, we have our gas contract, which has oil exposure basically pretty much hedged already, at least 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 oil or international fuel price issue.

Thank you, TK. 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.

Good afternoon. Welcome to CLP's 2025 Annual Results Briefing. My name is Marissa, Director of Investor Relations. And with me today is Chief Executive Officer, Mr. T.K. Chiang; and Chief Financial Officer, Mr. Alex Keisser. We lodged our 2025 annual results with the Exchange today. That announcement as well as this presentation is now available on the CLP IR website. This recording is also being recorded, and you can access that a little bit later on this evening.

Before we begin, please read the disclaimer on Slide 2. And this year, we've got 2 languages available; one, English and one, Putonghua for you to choose from. And for today's briefing, we'll start with T.K providing the overview, followed by Alex with the financial results, and then T.K will return with the strategic outlook. We will then conclude on with a Q&A session, and we encourage your participation and your questions. So with that, I will now hand over to T.K to begin the briefing. Thanks, T.K.

Yes. Thank you, Marissa. So good afternoon, everyone. Thanks for joining us. In 2025, our core Hong Kong business performed strongly, providing stability that offset market headwinds on the Chinese Mainland and also Australia and kept our overall results resilient. The fundamentals of our business remain strong. Our operational excellence continues to drive value across the group, advancing critical projects that secure energy reliability and our transition to 0 carbon. In Hong Kong, we completed our smart meter rollout and maintained world-class supply reliability despite facing a record Black Rainstorms and 14 typhoons.

On the Chinese Mainland, we brought our largest wind farm to date into commercial operation, launched our first independent battery energy storage system and commissioned our second centralized control center in Shandong. In India, Apraava Energy achieved full commissioning of its 251 megawatts Sidhpur wind farm, its biggest wind project to date. And in Australia, we completed outage programs at Yallourn and Mount Piper enhancing its flexibility and reliability. Our growth momentum is aligned with energy transition opportunities in our region. With a disciplined, value-driven approach, we are advancing a pipeline of low-carbon projects that will secure future earnings. At the same time, we have taken steps to drive cost efficiency and strengthen our foundations.

We completed Phase 1 of our ERP rollout in Hong Kong, advanced and enterprise-wide transformation at EnergyAustralia and optimized head office operations. We closed 2025 with healthy cash flow and a strong balance sheet. This financial resilience, combined with our growth momentum, gave the Board the confidence to increase the dividend, continuing our track record of delivering shareholders' returns.

Turning to the highlights. Financially, the group's operating earnings before fair value movements were down marginally by 2% to over HKD 10.6 billion. Total earnings were lower by 11% to HKD 11.5 billion, driven by coal plant-related items affecting comparability. So Alex will provide details shortly. The Board has recommended a final dividend, bringing total dividends for 2025 to HKD 3.20 per share, an increase of 1.6% from 2024. Operationally, we achieved strong performance in safety and reliability with a lower injury rates and reduced unplanned customer minute loss in Hong Kong.

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 sendouts declined by 3% reflecting lower coal output. At the same time, non-carbon capacity rose by 3%, driven by renewables and battery investments across the group. I'll now hand over to Alex for the financial results.

Thank you, T.K, and good afternoon. A summary of the key metrics. Earnings before interest, taxes, depreciation, amortization and fair value movement or EBITDAF was stable year-on-year at HKD 25.7 billion. Operating earnings before fair value movements decreased slightly by 2% to nearly HKD 10.7 billion. Adjusted for the fair value movements and items affecting comparability, total earnings was close to HKD 10.5 billion, a decrease of 11%. Capital investment declined 13% to HKD 16.4 billion, with higher growth CapEx offset by the absence of the headquarters acquisition booked in 2024. Total dividends for financial year 2025 was HKD 3.20 per share, representing an increase of 1.6%.

Let's go now into the details. The group's performance was anchored by a strong Hong Kong business performance. Elsewhere, earnings were impacted by market pressures, transformation costs and one-off items. Fair value movements on Energy Australia's forward energy contracts were less favorable compared to a year ago. Several nonrecurring items also affected comparability in '25.

A HKD 680 million impairment on 2 minority-owned coal plants on the Chinese Mainland was taken due to lower demand and rising competition from renewables. A HKD 345 million redundancy for Yallourn plant closure was also provisioned. While a positive contribution of HKD 390 million was booked from EnergyAustralia's Wooreen battery following the formation of our 50% joint venture with Banpu.

I'll now take you through the detailed performance and outlook for each business unit. All balances will exclude foreign exchange to reflect underlying performance of the business. Let's begin with Hong Kong. It was another solid year. Core earnings rose 7% to just over HKD 9.5 billion, driven by continued capital investment and high operational reliability. We also proactively refinanced debt in a favorable interest rate environment to lower interest costs. Capital expenditure was HKD 10.6 billion, focused on growth and decarbonization, supporting the northern metropolis development, data center expansion, grid upgrades and completing the smart meter rollout.

Electricity sales dipped slightly, reflecting milder weather and a high base into '24. However, demand from data centers continue to grow, reinforcing their role as a key structural growth driver. We continue leading Hong Kong's low carbon transition, investing and partnering across sectors from transport and shipping to building.

Looking ahead, our focus remains on 3 priorities: First, continue delivering safe, reliable electricity at a reasonable tariff. Second, delivered a HKD 52.9 billion development plan expanding infrastructure in growth areas and strengthening grid resilience to support Hong Kong's future. And third, support Hong Kong's 0 carbon goal by completing the clean energy transmission system and working closely with government to increase 0 carbon imports.

Now turning to Chinese Mainland. It was a challenging year shaped by transitional supply demand imbalances, softer demand and resource variability. Earnings declined 12% to HKD 1.6 billion, mainly from Yangjiang Nuclear and renewables. Yangjiang's contribution fell due to a higher share of output sold at market tariffs where prices were lower. Renewables were impacted by historically low wind resources and higher curtailment of approximately 9% across the portfolio, particularly in Jilin and Gansu. Conditions improved as the year progress in key provinces like Shandong and Jiangsu with easing tariff pressure.

Our minority coal portfolio saw reduced dispatch from lower demand. Nevertheless, operational performance continues to be strong. Energy sold increased across the portfolio with Daya Bay Nuclear delivering another standout year. We also commissioned 1 new win and 3 new solar projects adding to earnings, and we received a record amount of renewable energy subsidies, boosting our cash flow. While our annual contracting GEC and PPA volume with corporate customers increase, supporting short-term earnings visibility despite a softer pricing environment. And finally, on the development side, our pipeline remains healthy at over 1 gigawatt.

Looking ahead, Daya Bay will remain a stable contributor, while Yangjiang will face increasing market tariff pressure. For our minority coal assets, earnings should remain stable. Higher capacity charges under Policy 114 are expected to offset the removal of the floor price. The outlook for renewables is sound. Market fundamentals are stabilizing and tariff pressure looks manageable.

Importantly, we had success under Document 136. We secured full eligible mechanism tariff volume for 4 projects, locking in attractive rates for the next 10 to 12 years, providing solid long-term revenue visibility. Our capital strategy remains disciplined, and we're exploring efficient funding options, including onshore Panda Bond and strategic capital partnerships.

Two, EnergyAustralia. Overall performance was impacted by tough retail conditions and a combined HKD 300 million impact from the one-off tax expenses and upfront transformation costs. In generation, the fleet performed well. Mount Piper run reliably and our fleet operated flexibly to capture optimal pricing outcomes in a period of less volatility, effectively offsetting the Yallourn's lower output and Mount Piper's higher coal cost. Retail remained challenging. Intense competition and cost of living pressures led to margin compression, loss of customer accounts and higher bad and doubtful debts. That said, we saw improvement in the second half with early benefits from cost initiatives and recontracting activities starting to materialize.

We booked upfront cost under the enterprise segment, tied to the multiyear transformation program launched in 2025. This strategic investment includes our partnership with Tata to streamline IT operation and corporate functions. Separately, we are evaluating billing and [ CRM ] platforms to simplify and digitize the business. Earnings were also impacted by the one-off tax expense arising from changing law tax that limits the deductibility of interest expenses on shareholder loan. On the positive side, finance costs declined driven by lower average debt levels and reduced interest rates.

We also settled the maturing shareholder loan and put in place a smaller, more flexible perpetual note, an equity classified instrument with no fixed repayment obligation to strengthen EA balance sheet. The net result was operating earnings to HKD 85 million, reflecting the combined weight of retail performance, transformation investment and the tax one-off.

Looking ahead, EnergyAustralia is focused on 4 key actions: first, optimizing our generation portfolio, leveraging our flexible fleet to respond to demand and capture value in evolving NIM with high volatility. Second, building on second half momentum in retail to improve margins through targeted customer strategies, ongoing cost out and platform transformation. Third, executing our enterprise-wide transformation to deliver a leaner, more efficient operating model by 2028. And lastly, delivering new flexible capacity. We're advancing over a gigawatt of new batteries and pump hydro projects, with Wooreen on track for 2027, laying the foundation for stability and earnings growth.

Moving to India. Our joint venture platform, Apraava Energy delivered solid underlying performance. However, reported earnings were impacted by one-offs. Headline results were down 29%, primarily new to HKD 82 million one-off impairment on KMTL transmission. This compares to 2024 results that including one-off gains totaling HKD 55 million. Excluding these one-offs, our underlying operating earnings improved. Renewables delivered higher output, thanks to higher wind generation and the full commissioning of the 251 megawatts Sidhpur wind farm.

Solar remained stable, and we saw additional interest income from delayed payment. Transmission had solid availability and earnings from our 2 operating lines. Our smart meters portfolio is scaling up with more than 2.5 million meters installed and growing contributions as rollout accelerate with another 7.2 million meters to be installed.

Jhajjar thermal output was lower. But the plan maintained high operational efficiency and reliability. We continue to drive an ambitious growth pipeline. 18 Projects won within 3 years across a diversified portfolio for an equivalent of close to 2 gigawatt capacity.

Looking ahead, we remain focused on portfolio decarbonization and sustainable growth. A key milestone will be the sale of our Jhajjar coal plant, which is on track to complete in the first quarter. The sale will unlock capital for reinvestment and is expected to generate gain. With a clear path to decarbonize and a robust pipeline, Apraava is well positioned to capture India's significant energy transition opportunities and continue to deliver value to shareholders.

Finally, to Taiwan region and Southeast Asia, earnings declined to HKD 179 million. Ho-Ping's contribution in Taiwan was lower due to lower recovery of coal cost while Lopburi solar in Taiwan remained stable. We also incurred higher development and corporate expenses as we explore new opportunities in the region.

Looking ahead, Ho-Ping will focus on managing fuel cost. More broadly, we are assessing opportunities with long-term contracts across Taiwan region and Southeast Asia as part of our growth strategy. These targets benefit from strong economic growth, supportive policy settings and utility scale projects offer attractive potential. We are currently evaluating opportunities, including renewable energy projects in Taiwan and cross-border development linking Laos and Vietnam and we'll proceed with the right partners and funding structures in place.

Turning to cash flow. Free cash flow generation was strong, up HKD 1.6 billion to HKD 22.6 billion driven by solid EBITDAF and fuel cost recovery from declining fuel prices from our Hong Kong SoC business, alongside receipt of renewable subsidies from the Mainland.

With our new headquarter completed in 2024, overall capital spend came down. Total cash outflow was HKD 22.6 billion made up of HKD 14.6 billion of capital investment and HKD 8 billion of dividend payments. Of the HKD 14.6 billion of capital investment, HKD 11.2 billion was invested in our Hong Kong SoC business and HKD 3.4 billion was spent on renewables projects on the Chinese Mainland and Wooreen battery in Australia. Cash payment for dividends was higher as a result of the higher final dividends for financial year 2024.

Finally, our financial structure remains strong with a slight increase in net debt. Our liquidity remains sound with around HKD 29 billion in available facilities to meet business needs and contingency. The team has successfully raised over HKD 17 billion debt for the Hong Kong SoC business in addition to the refinancing of the USD 500 million perpetual capital securities, all with competitive credit spread.

Our prudent financial management continues to be recognized by rating agency, S&P and Moody's reaffirm our strong investment-grade ratings for CLP Holdings, CLP Power and CAPCO, all with stable outlooks. And finally, Moody's is upgrading EnergyAustralia outlook to positive on its investment-grade BAA2 rating.

I'll pass it now over to TK for the strategy update.

Thanks, Alex. Energy security and decarbonization are the critical forces shaping our industry's future and CLP is committed to leading this transition. Our strategic priorities are clear and centered on balanced growth, decarbonization and financial discipline. Hong Kong remains our cornerstone. It's stable, regulated framework provides predictable returns and dependable earnings that are fundamental to our strength. We are executing the HKD 52.9 billion 5-year development plan to deliver safe, reliable and affordable power while supporting government's economic and infrastructure agenda and accelerating the city's energy transition.

Our major focus is modernizing and expanding our power system to meet future demand from the northern metropolis, a 300 square kilometer development that will house 2.5 million people to the rising needs of data centers and electrified transport. This disciplined investment delivers for Hong Kong and builds a solid platform for sustainable growth.

Now building on that foundation, we are targeting growth in fast-growing energy transition markets in our region and doing it with discipline. Our strategy is firmly value over volume. Each investment must meet our minimum return requirements. The goal is to build durable recurring earnings while ensuring diversification.

China led global renewable energy in 2025, adding nearly 450 gigawatts of solar and wind and now reinforced by the government's landmark pledge to reduce emissions by 7% to 10% from peak levels. We are participating in that growth but selectively. In 2025, we added 0.5 gigawatt of renewable, which is modest compared with the national scale. Reflecting our calibration to ongoing market reforms, we have adjusted our development targets from 6 to 5 gigawatts of renewable energy by 2030.

We are prioritizing quality opportunities with long-term earnings visibilities. This means focusing on high-demand regions with strong resources and great access, expanding at existing sites where we already have scale, and securing long-term green power contracts or GECs with corporate customers. Encouragingly, we've had success post Document 136 implementation with 4 projects across Hebei, Yunnan and Shandong, each securing full eligible mechanism tariff volumes totaling around 1 gigawatt at attractive prices and long tenors supporting long-term revenue stability.

Importantly, our growth in China is being structured to be self-funded. From 2026, we plan to tap into onshore financing, like tender bonds and bringing strategic partners through a clean energy fund. It's a model we have already proven in Apraava, and we are applying that same capital discipline here. India's commitment to clean energy is clear, targeting 500 gigawatts of non-carbon capacity by 2030, alongside massive grid modernization, for greater efficiency.

This creates a powerful backdrop for Apraava's growth. As our self-funding joint venture, Apraava is scaling up across a low carbon value chain, wind, solar, transmission and smart meters. In the last 3 years, Apraava secured 18 projects across a diversified portfolio, all backed by long-term contracts that lock in stable, attractive returns. Today, it has around 2 gigawatts of low-carbon projects underway, targeting 9 gigawatts by 2030. As part of a diversified portfolio, the business will begin to explore opportunities across commercial and industrial customers and battery storage. Apraava Energy is a capital-efficient growth platform, enhancing both our earnings and long-term growth profile to Australia.

In 2025, solar and wind hit new milestones, supplying over 50% of the national electricity markets in quarter 4. This is a clear sign of where the market is heading. Our focus is on firming this increasingly renewable heavy grid. We are investing in flexible capacity that supports reliability and capture value as volatility grows through Australia's decarbonization.

EnergyAustralia has over 1 gigawatt of new dispatchable and firming capacity slated to come online in the next 3 years. We have made strong progress on multiple fronts. Over the last 2 years, we have secured government support for 3 key battery projects; Wooreen, Hallett and Mount Piper under the federal government's capacity investment scheme. These projects benefit not just from policy tailwinds, but also from existing lands, grid connections, skilled local workforces and EnergyAustralia's growing development capability. Our partnership model is delivering results.

We launched 2 major collaborations in 2025, the 351 megawatts Wooreen battery with Banpu, now under construction; and the 335-megawatt Lake Lyell pumped hydro projects with EDF in development. EnergyAustralia will remain self-funded using partnerships and project financing for large projects, EA's balance sheet for smaller ones and long-term contracts for projects outside our asset footprint. With a clear plan to reduce costs, a more flexible fleet and a strong pipeline of new capacity, EnergyAustralia is well positioned to deliver reliability, resilience and value in Australia's evolving energy markets.

Let me touch on our capital allocation approach. It can be summarized as invest for growth, but within our means while protecting financial strength and delivering shareholder returns. Our foundation is solid, a strong cash generation profile and solid investment-grade credit rating give us the flexibility to fund both operations and growth. Hong Kong's sustained asset growth underpins stable and predictable cash flow, supporting our consistent dividend. Beyond Hong Kong, we apply a disciplined lens to every investment. We prioritize capital for projects that are strategically aligned and meet our return thresholds.

We also run our established businesses with the objective of financial independence, maintaining stand-alone credit profiles and tapping diverse funding sources. We will leverage capital recycling and business model options, including partnerships, such as the clean energy funds on the Chinese Mainland for efficient use of capital. By adhering to these principles of discipline and diversification, we will drive steady long-term earnings growth.

Now finally, our core capabilities are what enable everything I've described. For CLP, it starts with operational excellence. That means consistently delivering strong performance across the energy value chain through efficient operations, reliable networks and great customer experience. We've strengthened grid resilience, modernize our infrastructure and leverage technology to improve efficiency, all of which underpin our reliability, cost discipline and safety performance.

Two critical enablers support our strategy, our people and our digital transformation. We are investing in our teams, reskilling and upskilling our workforce and fostering a culture that embraces change. At the same time, we are embedding digital solutions across the business, a key milestone was deploying our ERP system in Hong Kong alongside a digital literacy program that has reached thousands of employees, helping to improve efficiency and decision-making. These capabilities are interconnected and reinforcing. Together, they give us the competitive edge to meet the demands of a rapidly evolving energy sector. We faced the opportunities of energy security and decarbonization with discipline and purpose and with a clear focus on delivering sustainable long-term value for our shareholders.

I'll now hand over to Marissa to facilitate our Q&A session.

Thank you, T.K, and thank you, Alex. We will now begin the Q&A session.

[Operator Instructions]

Pierre Lau from Citi.

Can you hear me?

Yes, we can hear you well.

I have 2 questions. The first one is for Alex. If you look at Page 12, regarding EnergyAustralia, I think 2025 EnergyAustralia earning below expectation. And I can see that the sharp increase in the enterprise or the corporate expenses and also increase in depreciation and amortization expense. I want to note that these 2 number, I mean, minus HKD 177 million and also minus HKD 190 million, how much of them are on a recurring basis? And how much of them on one off basis? And also, what will be the outlook for 2026?

And the second question is on Page 15. Regarding your cash flow. So this is the question for T.K. So I can see that 2025, your CapEx -- for growth CapEx, mainly in Australia and China, still up year-on-year. But obviously, 2025 earnings from both Australia and China were not so good. So are we going to increase the CapEx further for these 2 countries in 2026. And also, we mentioned that we target something like double-digit IR for China and high single-digit for Australia. Are we too optimistic in terms of our return forecast?

Maybe Alex can answer.

Yes, I can start with the first one regarding EnergyAustralia. So -- and I will add one point, if you allow me. So if we look at the breakdown of the 3 points that you have raised, so the D&A increase depreciation and amortization is a recurrent up to [ HKD 228 million ]. That was linked to the increased CapEx that we did, mainly in Yallourn in order to increase its reliability and able to hedge more of its energy. The one which is linked to enterprise EBITDAF, this is more one-off linked to 2 activities. The first activity is the outsourcing of our IT and corporate services to Tata. So this has been done in order to prepare future reduction in our operating costs. It's an OpEx which is done in order to improve our operation.

And the second type of expense that we had is for the contracting for a new platform for our customers that has been not yet set, but for which we already had some expense. The third element that I want to raise, which we have not raised is regarding taxation. This is also a reduction in our earnings linked to a one-off as we took the decision not to deduct from the taxes, the interest payment between EA and CLP for the shoulder loan that was in place.

And Alex, just touching on the outlook on EA.

The outlook, I don't provide any outlook for that. So sorry for that.

Okay. Now regarding question 2, the CapEx for growth, as you can see on Slide 15, it's mainly for the Chinese RE projects and EnergyAustralia's Wooreen battery. Now for EnergyAustralia, Wooreen battery will only be commissioned next year. So the benefit actually will be coming. So there is always a kind of a time difference between CapEx and asset commissioning to bring in the benefits. Now regarding the -- but maybe one data point is that you -- last year, we have 4 projects commissioned in Chinese Mainland. Total is about 400 megawatts but right now, we have 5 projects under construction. The total capacity is about 900 megawatts. So we will see more asset coming online this year.

Now regarding the expected return, that's our hurdle rate, and we have been very disciplined in ensuring that the investment that we're making can satisfy the hurdle rate. As I also mentioned previously, in Chinese Mainland, we have had 4 projects with total capacity of about 1 gigawatt that have been successful in the mechanism tariff bidding process last year. For those mechanism tariffs, the tariff level actually are quite attractive, and all of those projects after taking into account the future projections of the market tariff, we are quite confident that the IRR actually is higher than our hurdle rates. So we will now continue to focus on winning these kind of mechanism tariff in our markets because having the mechanism tariff with protection on the tariffs for tenure ranging between 10 to 12 years will give us profit stability.

And maybe just touching on the fact that the target has reduced a little bit from...

Yes, because of the fact that we want to be more selective in the Chinese Mainland market. So we have adjusted down the target from 6 gigawatts to 5 gigawatts by 2030. And we want to be more selective in picking projects in markets or in regions that have relatively higher tariffs, greater demand lower risk of grid curtailment and also funding projects that are like extension projects that we have already had our existing asset, then we can leverage on the existing infrastructure to reduce the cost of those additional investments.

And maybe Alex touching on the funding?

Yes, I'd like to provide 2 more information. The first one is regarding China, we financed our project with a 70% to 80% project finance, while when we do our evaluation on the return on equity, we don't assume full recontracting of this project finance, and we assume an average of 50% debt over the lifetime of the asset, so taking a conservative approach.

Second information that I want to provide is when we look at our minimum return, we don't take into account potential gain on sell down in the future. So for example, when we took the Wooreen investment, we didn't take into account the gain that we did following this on the sale to Banpu, which was of HKD 390 million for the full 100% of equity.

Thank you. Alex. Thanks, Pierre, for your question. Next on line is Yonghua -- Yonghua Park from HSBC.

Can you hear me?

Yes.

Well I have about 3 questions. So in terms of long-term planning, India will add 9 gigawatt of non-carbon energy. So this seems to increase from last year's 8 gigawatt coal. Will you increase plan capital allocation from HKD 6 billion per annum to which number? And what's the reason behind this upgrade? Have you seen any improvement in terms of project return in India?

Secondarily, in Mainland China, renewable target is [indiscernible] to 5 gigawatts. So can we assume capital allocation could be also trim from 4 billion per annum last year number? And lastly, Yallourn coal-fired plant will be shut down at a point or any other point after that? I saw some news previously indicated that EA will invest AUD 5 billion for their structuring. Can you just clarify?

Maybe I try to answer the first question. Second question on CapEx, maybe I'll ask Alex to supplement. Now for the first question about the long-term planning in India, actually, I think this 9 gigawatt target is consistent with our long-term planning since last year. Actually, our target is to have about 1 gigawatt a year, so if you look at our existing asset and those assets under construction, so by 2030, adding 1 gigawatt a year of commitment then we can achieve this 9 gigawatt of non-carbon projects. And the capital allocation basically is based on this 1 gigawatt per year to deduce this HKD 6 billion per annum.

Just on the point that Yonghua, I think you were looking at the 8 gigawatt, it was a 2028 target. So now we've added 2030 an extra year, which is now 9 gigawatts.

Yes. So it's consistent, yes. Yes. And then on Yallourn, basically, we are maintaining this -- retiring Yallourn by middle of 2028. That's our current plan and actually the agreement with the government. Regarding the CapEx investment, I think it's longer term, after Yallourn closure.

I think Yonghua, that's -- you're referring to the Yallourn precinct investment? I assume that he is, yes.

I can try to cover here.

Maybe you cover the CapEx.

Yes. So first of all, on China, yes, of course, the HKD 4 billion per year will be slightly reduced by a bit more than -- by a bit less than 20% in light of the reduction of the target. One incremental information that I want to provide on this, we have taken the decision that by end of 2026, renewable activity of BU China will be self-funded with the raise of up to HKD 3 billion of Panda Bond and also the creation of a clean energy fund, we will have some partners to that. So that's regarding China.

Regarding Australia, maybe that was the question is we have a target to have by 2030, up to 3 gigawatt of flexible capacity or contracted or developed, and we are not looking at developing any renewable projects, and we also plan to do this on the balance sheet of EA with similar structure for the large project that what we have done for Wooreen, which is project finance and also we're seeking the right partners in order to reduce the funding needs and increase our return on these projects.

Thank you, Alex. Next question from JPMorgan, Stephen Tsui.

[indiscernible] The first is, can you please give some guidance on the CapEx outlook this year in terms of growth CapEx, maintenance CapEx and SoC? And about the dividend [indiscernible] because you've raised dividend by more than [indiscernible] this year despite [indiscernible] decline in operating earnings. So how about dividend growth this year given the headwind Mainland China and the Australia [indiscernible].

CapEx.

So 2 questions. Yes, maybe I'll ask Alex to shed some lights on the CapEx. Now regarding the dividend outlook. So basically, our dividend policy is to target to maintain a steady and growing dividend supported by sustained growth in our business. So we'll -- based on the longer-term assessment on our sustainability of our business and then decide the appropriate dividend level. So we will not give any outlook for the moment and all the dividend will be approved by the board by year-end. And maybe Alex can touch on the CapEx?

Yes. On the CapEx, so regarding the SoC CapEx, so we have a total of HKD 10 billion to HKD 11 billion per year that will be spent. Regarding growth CapEx, the growth that we had in India has slowed down slightly this year versus 2023, 2024. It's not being consolidated in any case, and it's being self-funded. The growth in terms of CapEx in China will be linked to the project that we will be able to close and the growth of CapEx related to Australia will be depending when we'll be able to start our project of Mount Piper BESS and when we'll be able to close our partnership on this.

Thank you, Alex. On the line is Cissy Guan from Bank of America.

I have a few questions, all regarding to the future capital strategy. First of all, you mentioned the clean energy fund in China, when do [indiscernible] on this? And what kind of partners are we looking for? Are there going to be insurance money or any specific type of investor do you think that may be interested in collaboration with us in renewable energy in China?

And also secondly, India, we saw that Apraava has sold the Jhajjar power plant. So will there be any special dividend be upstreamed to CLP? And thirdly, for EnergyAustralia, first of all, are we still looking for disposal of stakes? And also can you provide an outlook as regard to the wholesale power tariff in Australia going forward? And also how will the next [ CMO ] and video reset going to be? And how will the retail competition landscape going forward?

Okay. Maybe for the CF strategy, Alex can help address it. maybe also including the -- what happened after the Jhajjar sale. Now regarding the EA, the Australian market. Now we do see continued intense competition in the retail sector. So this will continue. So in order to address this, so we have taken steps to improve the business performance. First is to optimize our cost of operation.

Secondly is that we are looking at upgrading and replacing our customer platform. We are in quite an advanced stage, and we hope that we can confirm the technology and start execution this year. So with a new platform, we target to further improve the efficiency as well as enhancing the customer experience so as to improve our competitiveness in Australia.

Regarding the power price, I think in short term, if you look at the forward price curves, it softened slightly. So we will see, this will continue in the short term. But I think maybe starting from 2028, we do see the potential of forward price increase later because of some of the changes in supply situation. Now in Australia, because of the -- actually, the whole energy transition and decarbonization for CLP Group, the capital requirement is very significant. So we want to be focusing on our core markets, in particular, Hong Kong and China.

So for EnergyAustralia, firstly, it will be self-funded. Secondly, that we want to have different kinds of partnership in order to have more efficient use of our capital. So one example is the partnership in the Wooreen battery, where we have sold 50% to Banpu. This is a good example that on one hand, we can have a more efficient use of capital and secondly, that actually, the overall return of the project can be enhanced. And we are open-minded about different forms of partnership, be it at project level or enterprise level.

But more importantly, I think in the short term, we want to make sure that the business, actually, the performance is -- can be further improved, both in terms of the efficiency as well as how do we manage all the risks in the market.

Maybe I ask Alex to address the first 2 questions.

Yes. So I'll start with India. So the plan is when the transaction will be closed to have Apraava Energy doing it full distribution of the proceeds to [indiscernible] and CLP 50-50% over the year 2026 and 2027. CLP, however, doesn't plan to have an extraordinary dividend distribution being done following this distribution. Regarding China, we have to recognize that the CLP brand is very well recognized. The first was when we had our RMB 3 billion bond being approved by the regulators, we started to do a road show with our underwriter, and we plan to have this first RMB 1 billion being drawn upon in H1, which have been quite well received.

Regarding the clean energy fund, let me first explain you what the business model. The business model that we have is looking for the partners, bringing our full expertise in terms of development, in terms of operation, in terms of market sales, in terms of project finance and keeping our brand attached to this clean energy fund, meaning that we want to sell the project once they are being built. But we want also to stay into the fund being an LP with 50% in order to have aligned interest because this is not a one-off. This is a long-term strategy that we want to do, not only for Chinese Mainland, but also for other countries. Regarding who are the different investors. We are looking for a potential insurance company to be an anchor investor. And pending that, we will look for a few others, but a limited number for a fund, which will be around HKD 4 billion fund size with a total CapEx of HKD 20 million.

Thanks, Alex. I'll just note one more point on EA retail. Yes, it has been challenging conditions. But if you look at first half versus second half retail results, second half was a turnaround, and that was based on the work around customer acquisition, recontracting and the cost-out initiatives.

Okay. We've got a question from Huatai, Weijia Wang.

[indiscernible] The first is on market to specific [indiscernible] energy. We have all anticipated nuclear products. [indiscernible] share and also onshore [indiscernible] the next CapEx on [indiscernible].

Okay. Weijia, you were cutting in and out there. So I'm just going to assume your question. Number one is on nuclear investments. And then the second one, how that might impact CapEx in Hong Kong?

Yes. Okay. Now I assume that you are talking about our so-called nuclear imports in the medium term because in -- for the Hong Kong market, the government has set a decarbonization targets. And by 2035, we have to have 60% to 70% of our generation mix being known or being 0 carbon energy. So in order to fulfill that target, the plan actually is to import 0 carbon energy, mainly nuclear from the region to Hong Kong by 2025. Now for that plan, we are now still in a very early stage because importing nuclear from, say, Guangdong to Hong Kong, we need to have central government supports. And actually, right now, the Hong Kong government is discussing with the central government on identifying the right location for the nuclear power station and then how the power can be delivered to Hong Kong.

Now despite the fact that this is still in the early stage, if you look at the existing Daya Bay arrangement, actually, this is -- this could be a president arrangement in which CLP invests in the Daya Bay. Right now, the arrangement is we invest in 25%, and then we import 80% of the power from Daya Bay to Hong Kong through a dedicated transmission line, which can ensure that we are clear about the source of the power as well as ensuring reliability.

So this is a good reference for the future import arrangement. But as I said, I think right now, it's still very early stage. Once the -- it's more kind of -- it's clearer about where the power will be coming. Then we will enter into more detailed discussion with the relevant stakeholders in the Chinese Mainland, about the design of the network, how to bring the power in and also the commercial arrangement of the investment.

But again, another reference point is that for Daya Bay, the investment in the -- the equity investment in Daya Bay is not part of the SoC CapEx. Actually, it's invest at the CLP Holdings level. And through a PPA from Daya Bay to Hong Kong. So for the Hong Kong SoC, all this will be treated as OpEx and then the return on the investment in Daya Bay is based on an ROE approach. So again, this is a reference model. And whether this will be applied, it depends on the future discussion with the relevant stakeholders.

Thank you, T.K. We are heading towards time. So I'll take this as a last question from Rob Koh, Morgan Stanley. Thanks, Rob for joining us at the late hour in Australia. Go ahead with your question.

My first question is in relation to the customer platform upgrade in Australia. Other companies down here when they do that, they obviously do that very carefully. They take 2 to 4 years. Is that comparable time frame for EnergyAustralia? And then the second question is on the performance of the wholesale Energy segment. which saw some lower prices, but I guess the volatility capture offset that. Just want to make sure that's the right way to think about the generation performance?

Yes okay. Thank you, Bob -- I think Rob, sorry. Yes. Now for the customer platform, our current plan is to take about 2 years or slightly more than 2 years. So by before end of 2028 would be our current targets. Now -- but we are still working on the detailed planning right now. And as I mentioned, we are in a very advanced stage of selecting the appropriate technology. So we are working very closely with the future potential vendor on this detailed plan. So there will be more details later in the year. But our current thinking is that we will complete this before end of 2028.

Now for the wholesale market, as we mentioned, in the forward price, you can see lower price level. But actually, if you look at the intraday volatility, over the past few years, this volatility actually is increasing. So that's why for EnergyAustralia, we have been focusing on investing in storage -- energy storage projects so that we can capture the benefits of this volatility in the Australian market.

Thank you, T.K. Thank you all for your very good questions. And thank you, T.K and Alex for the briefing and answering the questions.

Before we wrap up, I just wanted to announce the winners of our closest estimates competition. There are 2 this year. The first goes to Qi Kang from Huatai Securities, again, for the closest operating earnings. And the second for the closest annual dividend goes to Evan Li from HSBC. So congratulations to you both. My team will reach out to you about your prizes.

That brings today's briefing to a close. My team and I will be available for any follow-ups. And thank you all for joining us today. Take care and goodbye.

Thank you.

Thank you.