In a robust display of financial health, CLP Holdings (OTC:CLPHY) has announced substantial growth in its interim results for 2024. The company's earnings before fair value movements saw a 22% increase, bringing the total to HK$5.7 billion, while overall earnings rose by 18% to nearly HK$6 billion.
A key contributor to this performance has been the solid earnings growth from EnergyAustralia and the operational success of a new 600 MW gas unit in Hong Kong and the Tallawarra B plant in Australia. With a strong commitment to transitioning to a low-carbon portfolio, CLP Holdings has maintained a stable financial position, enabling it to recommend a second interim dividend of HK$0.63 per share.
Key Takeaways
- CLP Holdings' operating earnings before fair value movements climbed by 22% to HK$5.7 billion.
- Total earnings increased by 18% to nearly HK$6 billion.
- The company has recommended a second interim dividend of HK$0.63 per share.
- Successful operations of a new 600 MW gas unit in Hong Kong and the Tallawarra B plant in Australia were highlighted.
- A strong focus on transitioning to a low-carbon portfolio and executing the development plan in Hong Kong was emphasized.
- CLP Holdings reported a healthy financial position with stable earnings and a robust future growth pipeline.
Company Outlook
- CLP Holdings is executing a HK$52.9 billion five-year development plan.
- The company aims to focus on decarbonization, investing in growth, uplifting capability, and disciplined capital allocation.
- CLP Holdings is open to partnerships to fund the required investment for its development strategy.
- The company is prioritizing digital transformation and developing a future-ready workforce.
Bearish Highlights
- The subsidy to control coal prices in Australia ended in June, which could impact electricity costs for customers.
- A major overhaul for Yallourn will lead to a reduction in generation.
- Cash inflow was strong due to EBITDA and timing reasons but is not expected to recur.
Bullish Highlights
- The company generated strong free cash flow of HK$8 billion, driven by underlying EBITDAF performance.
- Positive underlying earnings contributions were reported from a balanced and diversified portfolio, including strong operational performance in transmission and the Jhajjar coal-fired power station.
- CLP Holdings has around 2 gigawatts of non-carbon projects currently in execution.
Misses
- Cash outflows totaled HK$14 billion, mainly due to capital investments and dividends payments.
Q&A Highlights
- The outlook for power prices in Australia will depend on supply and demand and the progress of renewable energy projects.
- CapEx is expected to increase in China due to the company's development strategy, while in Australia, it will be self-funded.
- The gas plant contributes to the flexible capacity portfolio and its contribution is expected to increase in the long term.
- CLP Holdings benefited from the volatile New South Wales coal price event in May and will pass on the Queensland subsidy to customers.
EnergyAustralia, a subsidiary of CLP Holdings, discussed their balance sheet and financing plans during the earnings call. They plan to use a mix of corporate finance and project finance to fund small and large projects, respectively. The company expects the contribution from its flexible capacity portfolio, which includes a 1.6-gigawatt capacity in New South Wales, Victoria, and South Australia, to grow alongside the renewable energy market in Australia.
EnergyAustralia also stated that they will continue their practice of not providing earnings guidance, and they will pass on a government subsidy in southeast Queensland to their customers to help ease cost-of-living pressure.
InvestingPro Insights
CLP Holdings (CLPHY) has demonstrated a robust financial performance in its recent interim results, which is further substantiated by several key metrics and insights from InvestingPro. With a market capitalization of $21.88 billion, the company's valuation reflects its prominent position within the Electric Utilities industry, a status also highlighted as an InvestingPro Tip. The adjusted price-to-earnings (P/E) ratio for the last twelve months as of Q4 2023 stands at 16.01, which may appeal to investors looking for reasonably valued stocks in the sector.
InvestingPro Data indicates that CLP Holdings has maintained a solid dividend yield of 4.12%, with the last dividend ex-date being June 3, 2024. This is consistent with the company's history of dividend payments for 27 consecutive years, an aspect that long-term investors might find particularly attractive. Additionally, the company's shares are trading near their 52-week high, at 96.82% of the peak price, which could signal market confidence in the firm's prospects.
InvestingPro Tips further reveal that despite a decline in revenue growth in the last twelve months as of Q4 2023, with a -13.4% change, the company's cash flows have been sufficient to cover interest payments. This financial stability is crucial for CLP Holdings as it continues to invest in its low-carbon transition and development strategy. For investors seeking more detailed analysis and additional tips, there are 6 more InvestingPro Tips available for CLP Holdings at https://www.investing.com/pro/CLPHY, which can provide a deeper understanding of the company's financial health and future outlook.
Full transcript - CLP Holdings Ltd (CLPHY) Q2 2024:
Marissa Wong: Good afternoon, and welcome to CLP Holdings 2024 Interim Results Briefing. My name is Marissa Wong, Director of Investor Relations. And today, I'm joined by Chief Executive Officer, Mr. T.K. Chiang; and Chief Financial Officer, Mr. Alex Keisser. We launched our 2024 results with the Hong Kong Exchange today at around midday. Those results, as well as this presentation, is available on our website now. This briefing is also being recorded and will be available on our website later. Before we begin, please remember to read the disclaimer on Slide 1. And for today's agenda, we'll follow the usual practice, which is T.K. to deliver the overview as well as the strategic outlook, Alex to take you through our financial results, and this will end with a Q&A session. With that, I will now hand over to T.K. to commence the briefing. Thank you, T.K.
T.K. Chiang: Thank you, Marissa. So, thank you for joining us for our 2024 interim results briefing. I am pleased to report a strong start to the year with solid growth in the group's earnings and improved results from EnergyAustralia. These results illustrate that the fundamentals of CLP remain strong despite volatile global conditions and growing complexity of new energy systems. Operational delivery remains at the core in our pursuit of energy transition. This half, we continued our track record of delivering significant projects. In our home market, the last piece of gas infrastructure, our 600 megawatt D2 unit, went into operation, enabling the gradual retirement of coal-fired units. In Australia, amidst increasing price volatility, we achieved first fire at Tallawarra B, the only picking plant added to the New South Wales grid in the past decade. And across all our markets, we've worked tirelessly to improve the availability and reliability of our 23 gigawatt fleet as we responsibly transition to a low-carbon portfolio. Our growth momentum is matching the energy transition opportunities in our markets. In Hong Kong, we continue to make progress executing the new development plan. In China and India, we accomplished one of our strongest zero-carbon growth performances due to increases in power demand and the push towards electrification and decarbonization in these markets. At EnergyAustralia, we advanced with approvals for the development of the 350 megawatt Wooreen battery in Victoria and a 50 megawatt battery system at Hallett Power Station in South Australia. Our financial position remains strong as evidenced by the S&P maintaining our investment grade credit rating and a stable outlook for CLP Holdings, CLP Power, and CAPCO, and Moody's (NYSE:MCO) doing the same for EA. With stable earnings, sound capital structure and a healthy development pipeline, the foundation for future earnings and a lower carbon future are set and well underway. Now turning to the highlights, financially, the group's operating earnings before fair value movements increased by 22% year-on-year to nearly HK$5.7 billion. This reflected solid contributions with delivery from across the group along with an improved earnings contributions from EnergyAustralia. Operating earnings after fair value per share increased to HK$2.32, and the Board has recommended a second interim dividend of HK$0.63 per share, equal to the first dividend. Total earnings were also up 18% to nearly HK$6 billion, representing HK$2.36 per share. Based on our share price at the end of June, this provides a yield to investors of 4.9%. Operationally, our injury rates remain stable, and we continue to prioritise safety as we enter into high level of * field activities. Our reliability, measured by unplanned customer minute lost, was impacted by extreme weather and power supply incidents in Hong Kong. Nevertheless, Hong Kong's network reliability remains exceptional by world standards, and we will continue our effort to uphold this. On the customer front, we saw growth in our customer accounts in Hong Kong, while intense competition in Australia resulted in a slight reduction. Electricity output from our generation facilities was stable. The slight decrease in generation capacity reflects the retirement of three coal units in Hong Kong. I'll now welcome Alex for the first time as group CFO to take you through the financial results.
Alex Keisser: Thank you, T.K., and good afternoon. It's my pleasure to report a strong set of results this half. The snapshot of key financial results metrics shows that we achieved growth in earnings, while investing for the future and returning to our shareholders. Earnings before interest, tax, depreciation and fair value, or EBITDAF, increased by 17% to close to HK$13 billion. This reflected sustained capital expenditure in Hong Kong and the turnaround at EnergyAustralia. Increase in EBITDAF supporting operating earnings growth of 22% to close to HK$5.7 billion. This was slightly impacted by higher interest cost in Hong Kong and higher tax expenses. Adjusted for fair value movements and items affecting comparability, total earning for the period was slightly higher than operating earnings before fair value. Capital investment of over HK$10 billion was higher than last year, reflecting our focus on decarbonization and supporting infrastructure growth. Total interim dividends per share declared in the first half were maintained at HK$1.26, same as last year. Overall, the EBITDAF evolution reflects solid growth in earnings. There was a small impact of currency movements against Hong Kong dollar. Otherwise, the EBITDAF waterfall shows EnergyAustralia as the major driver for the period-on-period increase, followed by dependable performance from Hong Kong and profitable growth in India. The reduced contribution from Mainland China coincided with a major scheduled maintenance work at Daya Bay and Yangjiang nuclear plants. I will go into detail on each of the regions in the following slides. At the operating earnings level, we saw higher contribution from all regions, except for Mainland China, Taiwan region and Thailand. Hong Kong delivered very robust underlying performance with earnings of almost HK$4.3 billion. Earnings for Mainland China reached almost HK$1 billion, impacted by scheduled 30 years and 10 years outages at Daya Bay and Yangjiang, respectively, both of which were completed on time. EnergyAustralia delivered its turnaround from a lost position to positive earnings, reflecting improved performance in the energy and customer segments in a market that continues to evolve. India's Apraava Energy continues to grow, with increased contributions from a diversified portfolio of renewable, transmission, smart meters and thermal. Our asset in Taiwan was impacted by more plant outages and an earthquake, while Lopburi Solar in Thailand had reduced contribution due to lower tariffs. Ongoing digitalization and corporate center optimization led to a 7% improvement in cost as we focus on driving further efficiency in our business. We therefore, reported operating earnings before fair value at nearly HK$5.7 billion, 22% higher than the first six months of 2023. Fair value was positive, reflecting on accounting gain on EnergyAustralia's forward energy contracts against prevailing prices as of end June 2024. After one-off elements, the group's total earnings for the period increased by 18% to nearly HK$6 billion. I'll now take you through the performance and outlook for each business unit. All variances will exclude the impact of foreign exchange and scope to reflect the organic actual underlying performance of the business. Starting with Hong Kong, we delivered another financially-dependable half-year performance in an environment of higher global interest rates. Operating earnings were up by 3%, reflecting higher average net fixed assets from continued capital investment, which was around HK$4.1 billion this half on an actual basis. Earning was slightly offset by higher interest costs. Operational performance was sound, with local electricity sales up by 2.6%, driven by higher temperature and economic recovery. Average net tariff was at a lower level compared to this time last year, as fuel cost adjustment reduced by over 5% since the start of the year, reflecting softening of international fuel prices. As T.K. mentioned, the D2 CCGT generation unit went into service in April. Looking ahead, the focus will be on delivering the new development plan, investing in low-carbon energy systems, and bringing in more zero-carbon energy, and continue to provide support to communities in need and being the energy partner to customers to deliver reliable electricity at a reasonable tariff. Moving to Mainland China. Underlying performance of our Mainland China business remains solid. This half results reflected low output from our nuclear portfolio, due to scheduled maintenance required on their anniversary years of operation. Earnings from renewables remained solid, with slightly higher output from the portfolio and contribution from new grid-parity projects. Earnings from our minority owned coal plants decreased due to lower tariffs, although this was partially offset by stabilizing fuel prices. In aggregate, our earnings for Mainland China decreased by HK$384 million to just shy of HK$1 billion. Looking ahead, nuclear is expected to be back to normal operations in the second half. On renewable development, we are poised to capture the structural power demand growth in Mainland China, with a healthy pipeline and new capacity additions expected to contribute to earnings. And we will continue to leverage our international presence to foster green contracts and energy solutions for corporate clients and local governments. In Australia, the business turned around from a loss position to positive HK$611 million operating earnings, the net results of much stronger performance from the energy and customer segments. In the energy segment, the combination of measures that we undertook to improve thermal plants reliability and availability, as well as the rolling off of lower price forward contracts, led to higher realized prices for both Yallourn and Mt Piper. Increase in the customer segment was due to improved recovery of energy procurement cost compared to last year. However, this was against a backdrop of more intense retail competition, lower customer demand and cost of living pressures. The uplift in depreciation is based on the increased investment for Yallourn [toward '23] (ph) outages and capitalization of additional decommissioning costs. Lower finance costs were driven by lower average drawn debt, and in line with improved financial performance, tax expenses increased. Looking ahead, our focus remains on strengthening the operational and financial performance of Yallourn and Mt Piper against viable wholesale prices and higher fuel cost for Mt Piper as coal price caps expire. Competition remains high, leading to pressure on earnings contribution from the customer segment. We continue to focus on serving our customers and advocacy on energy affordability. EnergyAustralia is set to develop flexible capacity projects under the Climate Transition Action Plan, including the Wooreen utility-scale battery in Victoria and the Hallett battery located next to Hallett Power Station. Finally, to India, where our joint venture platform, Apraava Energy, continued its strong momentum and delivered 61% increase in operating earnings to over HK$200 million. Underlying earnings contributions were positive across a balanced and diversified portfolio. Growth in earnings came from strong operational performance in transmission and Jhajjar coal-fired power station. Operating expenses improved, mainly due to the recognition of deferred tax assets related to prior tax losses. Apraava Energy has an equivalent of around 2 gigawatts of non-carbon projects currently in execution, including two renewable, one transmission and two advanced metering projects won in the first half of this year. Looking ahead, the joint venture will continue to build out its pipeline of zero-carbon projects to meet rising energy demand and support the country's decarbonization. We are working with the government authorities to renew the necessary approvals for participating in government greenfield auctions. Moving on to the group cash flow, our free cash flow generation was strong at HK$8 billion, driven by underlying EBITDAF performance. Cash outflow were higher, totaling HK$14 billion, made up of HK$9.3 billion of capital investment. Most of the CapEx was for our Hong Kong SoC business standing at HK$6.1 billion. The rest was made up of renewable projects in Mainland China and part payment for our new headquarters in Kai Tak. Dividends payment represent HK$4.6 billion. Note that our cash flow is seasonal with cash inflow usually lower in the first half combined with higher dividend payment due to the practice of a higher final dividend. Financial structure of the group was maintained at a strong position, with modest growth in debt and a sound liquidity position. Confirming this strength, S&P reaffirmed the credit rating and stable outlook in May for CLP Holdings, CLP Power and CAPCO at A, A+ and AA-, respectively. Similarly, Moody's has kept EA's rating. This is also reflected in our ability for the group to raise competitive financing to maintain a balance sheet debt maturity profile and fixed floating composition. This half, the Scheme of Control business arranged a total of HK$11.4 billion bank facilities and bonds with low spread from a diversified base of international and local lenders and investors. Our Mainland China and Australia business also executed respectively HK$3.3 billion and HK$3.9 billion bank facilities to support energy transition. With a solid investment-grade balance sheet and healthy liquidity, we are very well positioned to back our business growth and stay true to our long history of dividend payment. I'll pass it over to T.K. to take you through the group's strategic priorities.
T.K. Chiang: Thanks, Alex. So, I'll now briefly recap and update on CLP's long-term strategy as we orient ourselves to capture the tailwinds of the energy transition. Our purpose remains the same, to power brighter tomorrows in the era of net-zero transformation. The pillars of decarbonization, investing in growth, uplifting capability, and disciplined capital allocation will be the drivers of successfully building energy systems and serving our customers, together with our decades of experience and 8,000-plus hard-working colleagues who are committed to making a low-carbon future a reality. Now, to the progress that we have made, our ongoing priority is to deliver the new HK$52.9 billion five-year development plan. This development plan is a series of five-year plans under the Scheme of Control regulatory framework that underpins our world-class electricity system built on decades of planning and long-term investments. In fact, 2024 marks the 60th anniversary of the Scheme of Control. It is a remarkable framework that has stood the test of time and continues to provide the stability for us to deliver reliable, cost-effective and cleaner power. We achieved a few milestones under the SOC this year. Our 600-megawatt D2 combined cycle gas turbine generator went into operation in April. The CCGT, along with our recently commissioned offshore LNG terminal and enhanced interconnected capacity, are critical pieces for the retirement of coal generation. We also mark an achievement in the development of nuclear energy. This region's first commercial nuclear plant, Daya Bay, celebrates 30 year of supplying Hong Kong with clean, reliable and reasonably priced electricity supply. And, it is this kind of careful planning, prudent investment and successful regional cooperation that is required to carry out the demanding program of work under the latest development plan. This is key to delivering Hong Kong government's economic and infrastructure agenda. Our approach to growth and investment matches the needs driven by electrification and decarbonization. The markets that we operate in have some of the richest opportunities. On current estimates, China will add 250 gigawatts of new wind and solar power capacities just this year. India is targeting 500 gigawatts by 2030, which translates to 80 gigawatts a year. And Australia has 82% renewable targets by 2030. Our targets are modest in comparison, but it does reinforce our approach of value over volume and investing in those assets which meet our return criteria over the long-term. Our philosophy to financing remains responsive to ongoing market developments. Now for China, subsidy-free ROE projects will be funded by mostly non-recourse project financing and the remainder by equity. Our businesses in India and Australia are set up as self-funding businesses and will use a combination of cash generation, non-recourse project financing and partnership where it makes sense to help accelerate the development. And we have made good progress. Development activities has been strong, our pipeline of opportunity is healthy and we are well on our way to meeting our targets. Focus will be on maintaining a disciplined capital program to deliver this growth platform that will, together with existing strong foundations, contribute to future earnings growth. Strategic backbones to our success will be digital transformation and a future-ready workforce. We have been implementing programs of work to drive both into our organization. Our commitments to digital is transforming the way we manage our resources, engage with customers, and helping us unlock values embedded in years of industrial know-how and experience. It is not just about keeping up with industry trends. It is about strategically positioning ourselves to enhance our efficiency, reliability, and customer experience to take on energy demands of tomorrow, hence the energy to delivering is our people. Investing in our workforce is also securing our sustainability in the new energy order. We have taken actions to address talent gaps and scaled up capabilities needed to meet the pace and scale of net-zero transformation. To sum up, our business performance is strong and we are progressing well on our strategic objectives. Together with embracing our core values of care, excellence and responsibility, and establishing a new way of working culture, we are well-positioned to continue to deliver value and returns to our shareholders, customers and communities. With that, I will hand it over to Marissa for Q&A.
A - Marissa Wong: Thank you, T.K., and thank you, Alex. We'll start the Q&A session now. So, we've got two channels; one for the Zoom (NASDAQ:ZM) people, if you want to raise hands and ask a live question, and for those webcast participants, if you want to type your question in the chat box on the bottom-right hand of your screen. So, the line is opened, and I see Pierre from Citi has come through. Pierre, if you'd like to unmute yourself and ask a question, please?
Pierre Lau: Hello. Thanks management for the time, and congratulations for your good first half result. I have three questions on the company. The first one is for your Australian business, you show a margin expansion for your energy business in the first half. Do you expect further margin expansions of your energy business in Australia in the second half? And if yes, what will be the driver? Second question is also about your Australia business. I think you have mentioned to this both part of your Australian business for a while, but so far nothing has been conclude yet. So, I would like to know if there's any update on this issue or your strategies has been changed on this aspect. And the last question is, so you showed that you have paid HK$2.7 billion for new headquarters in Kai Tak, in Hong Kong. So, I presume that you'll move your people into that headquarter later, and then maybe you can save some rental expense at the current headquarter. So, how much saving in terms of rental expense that we can expect per annum starting from 2025? Thank you.
T.K. Chiang: Thank you, Pierre, for your question. Now for the first one, in the first half of the year, we -- for the EA, for the customer business, we were able to recover the high procurement energy costs, but at the same time actually it was also offset by some of the margin reduction due to intense competition. Now going forward in the second half actually we see the intense competition will continue, hence the energy price would continue to be high. But of course, the Australian market actually has always been volatile, but our ultimate objective is to make sure that we deliver the value for money service to our customer. Now, regarding the partnership arrangement, so actually this is not so-called for EnergyAustralia, across our whole group, we expect very significant capital requirement for the energy transition across all our markets. Now, of course, we want to focus on our core markets in Hong Kong and China, and for diversification purpose, we want to maintain our business in Australia and also in India, but in view of the capital requirements, we are open-minded about bringing in partners in order to help fund the required investment. So, a good example, like in India, we have successfully introduced CDPQ as a partner. Now, we are in a 50-50 joint venture. And in Australia, actually, we are open-minded about different forms of this kind of partnership, be it in the form of, like, at project level or at the enterprise level. So, we are open-minded and we will continue to explore various options. Now, regarding your third question about our new office in Kai Tak, our current plan is to complete the renovation towards the end of the year and the plan is to move-in probably in December. Now, the current Laguna office, our short-term plan is to use it as a, like, a temporary office because we may need to have some renovation in other offices in Hong Kong. So, for example, temporarily, we may move our colleagues to the Laguna office in Hong Kong to carry out renovation in other offices and then people can then move back. Now, for the longer-term, we are still reviewing the usage of the office in Hong Kong, Pierre. Thank you.
Marissa Wong: I think Pierre also touched on margins for the energy segment as well. We might address that one. Maybe I'll take -- get Alex to address that. But Pierre, on Slide 42 of the presentation pack we have the wholesale prices there for you to have a look at. So that can give you an indication of market prices anyway. But Alex, you want to take the energy segment?
Alex Keisser: I can cover that. You have two main points, which is what will be the quantity of generation that we will have, and the second is what will be the prices that will be seen in the market. In terms of generation, we will have a major overhaul, which is going to be the fourth one for Yallourn. So, we shall expect a reduction on the generation from Yallourn for this major overhaul. In terms of prices, the main difference is that the subsidy that was provided to keep the coal price under control and lower the cost of electricity for the customers and was finalized end of June. So, this will not continue in the next half.
Marissa Wong: Thank you, Alex. Thank you, Pierre, for your question. Next on the line, Evan Li from HSBC. Hi, Evan. Go ahead and ask your question. Evan, if you can hear me?
Evan Li: Hi.
Marissa Wong: Great. Go ahead.
Evan Li: Yeah. Good. Thank you. Thank you, management. I have three questions. One would be on Yallourn. With the maintenance program finishing by end of this year, is Yallourn still expected to retire by 2028 or is energy [Technical Difficulty] as an extension to earnings? That would be my first question. Second question will be on cash flows. I see that, if I'm correct, in the first half of this year, cash inflow, or you call it a free cash flow, seems to be falling short of CapEx, dividends, although Australia has improved which I think is a major factor to that improvement perhaps. But then in 2023, last year, we saw that for the full year that free cash flow was in excess of CapEx and dividends, but then in the first half of last year, we saw that cash flow on the inflow was also quite weak. I'm just wondering, is there any -- how much seasonality factor is there for CLP overall or maybe specifically for the non-Australian businesses because of the month end that we're going from June to December And then -- that was -- that would be my second question. And the third question for T.K., ma'am, would be, just wondering if there's any upside to the current development plan in Hong Kong for the current five years. Any chance for that CapEx number to be lifted up based on what's happening within Hong Kong as infrastructure and such? Yeah, that will be the three questions. Thank you.
T.K. Chiang: Yeah. Thank you very much for the question. Maybe I'll ask Alex to address the second question and I will address your first and third question. Now, for Yallourn, we are now undergoing the maintenance program and the last -- outage for the last unit will be completed by Q4 this year. Now, at this moment of time, we are still committed to retiring the plant by 2028. And actually the -- we have made provision for the decommissioning. At the same time, for the coal mine, we are also preparing the rehabilitation plan, which will be submitted to the government and to be approved probably in 2025-2026. Regarding the Hong Kong business, the development plan, right now we are executing the plan based on the approved HK$52.9 billion. When you say upside, I don't know whether you are referring to any additional CapEx or regarding the incentives. Now, under the SOC, there are some incentive payments based on our performance, so basically, we'll evaluate that based on the SOC. Now regarding CapEx, now it all depends on whether there are in future. Now up to this moment, we don't have any so-called additional CapEx. But in the past, like in the previous D-plan, during the execution, if there is any additional requirement, so we will enter into discussion with the government and see whether we would have like a supplementary development plan or another development plan, but it all depends on whether there will be any additional requirements.
Alex Keisser: Regarding your second question, first of all, our cash inflow this semester was strong with HK$8 billion, which was mainly due to two reasons. The first one is a very strong EBITDA, as you could observe. The second one is a timing reason. We received in advance some payment from the state of Queensland in Australia. And there are some taxes that we have not paid yet that shall be paid next year in Hong Kong. So, these two are exceptional event that will not be recurring. So, our cash inflow is quite strong with two exceptional event. On the cash outflow, the main difference versus last year is linked to an increase, as stated, of the SOC CapEx, growth CapEx, and also the acquisition of Kai Tak headquarter. Regarding our seasonality of the results, we will not comment on the forward looking for EA, but this will be certainly the main driver for the difference between this half and next half linked to what I've mentioned before in terms of the energy generation and profit, as well as a high level of competition.
Marissa Wong: Thank you, Alex. Steven Choi from JPMorgan (NYSE:JPM). Steven, if you can hear me, go ahead and unmute yourself and ask your question.
Steven Choi: Hi. Thank you, management, for your time. I have three questions. The first is about the Australia business. So, what's our outlook on the long-term power prices in Australia wholesale market? Because it seems the gas and coal prices remain elevated and the renewable connection in Australia is lower than expectation. So, shall we expect the wholesale prices to sustain? And then, about the significant improvement in the Australia wholesale business, how much was contributed by the gas-fired plant? And my second question is about the capital expenditure. So, how shall we project Australia and Mainland China CapEx going forward? Because we spend around HK$2 billion to HK$3 billion in Australia and less than HK$1 billion in Mainland China over the past few years. So, shall we expect the CapEx to be similar? And the last question is about the dividends, because we have kept dividends flattish over the past three years because of the volatile Australia business, and now the Australia business is turning around and it seems the power prices remain elevated. So, shall we expect the dividends to be growing in line with the Australia turnaround? Because we just keep flattish dividends for the interim period? Thank you.
T.K. Chiang: Yeah. Thank you, Steven. So, maybe I will take the fourth -- question on dividend and then I will touch on question one about the outlook, but then I will also hand over to Alex to talk about the price trend as well as the question two and three about the earning contribution and also CapEx. Now, for the dividend, it's always our policy to maintaining a reliable and consistent dividend. And we target to look for dividend growth provided that it could be supported by the business growth and also a kind of sustainable financial condition of the company. I would say that the first half of this year, we are doing good, and if we can continue to generate sufficient growth for the company, of course, we'll try to look at whether we can adjust the dividend. But at the end of the day, the Board will make the decision on the dividend based on the financial conditions. Now, regarding in Australia, I think the outlook for the longer-term power prices would really depends on the supply and demand, and in particular, the renewable energy investment in Australia. Now recently, we do see some slow progress about addition of renewable energy projects in Australia and that might result in the energy prices, as you mentioned, staying in a relatively elevated level. Now going forward, I think it depends on the supply and demand and as well as the -- for example, even weather conditions may have a change on the demand when there are extreme weather, et cetera. Another issue is whether the plant condition would really perform. You can see there are instances where, for example, in 2022, our plant actually did not perform. And this year, actually in May, there are also instants -- incidents that resulted in plant outages. But over the longer-term, I would say that the wholesale price seems to be relatively stable. So, maybe I hand over to Alex.
Alex Keisser: So, we'll start with the CapEx question, and I will link the CapEx question with the funding strategy that we apply. First, in China, the CapEx is expected to increase, thanks to the success that we have in our development strategy and the desire to double our capacity. The plan is to have this being funded on a project finance, as mentioned by T.K., and the remaining equity will be done, thanks to CLP balance sheet. In Australia, it will be self-funded. All the development that we do in Australia will be self-funded, like in India. The development growth is structured in a different way. The renewable plants are not being built by us, but they are being contracted, so we don't make access to a balance sheet for this at the EA level. While the flexible capacity are being developed on the balance sheet of EA, thanks to a mix of corporate finance for the small project and project finance with partners certainly for the large one. So, this is to address the question on the CapEx. Regarding the earnings contribution from the gas plant, the gas plant represents an important part of our flexible capacity portfolio with 1.6-gigawatt in the three main market of New South Wales, Victoria, and South Australia, to a lesser degree. With the volatility increase that bound to happen in Australia with more renewable coming in, the contribution from this portfolio is expected to increase over the long-term.
Marissa Wong: Thank you, Alex. And Steven, we've made some disclosures in our pack on just targets and growth pipeline on Slide 19. So, you can refer to that slide for more information. Okay, we have Rob Koh from Morgan Stanley (NYSE:MS) on the line from Australia. Hi, Rob, go ahead and ask your question.
Rob Koh: Hello, good evening. Thanks for taking my question. Apologies, I joined a bit late. One of my other companies had an announcement. So, if this question is already dealt with, just move on. I guess first question is, I take it from your disclosures that you're continuing the longstanding practice of not providing any earnings guidance, and just wonder if that's one of the things the new and refreshed management team had thought about. And my second question, I guess, inevitably relates to Australia. Just, I guess, two parts to this question. In May, in Australia, there was a very volatile New South Wales coal price event. Just wondering if EnergyAustralia was lucky enough to benefit in that. And then secondly, in the second half, in southeast Queensland, the government there is providing a very generous A$1,000 per household subsidy. And if you could maybe comment on how that could impact on your business, please?
T.K. Chiang: Thank you, Rob, for your question. And also thank you very much for your comment on our practice of no earning guidance, which at the moment we'll continue with that practice. But I will take your comment. And for your second question, during the event, I would say our generation plant did perform well and continued to generate. To a certain extent, I would say we were benefited from that event. Now, regarding the Queensland subsidy, we have already made a so-called commitment that we will basically pass through the subsidy to our customer. And I think to a certain extent it would be good to the business because that will help ease the pressure, the cost-of-living pressure, because actually in Australia we are also, I would say, suffering from the increasing cost-of-living pressure, which actually has put pressure on our margin and the cost of supporting the underprivileged companies -- underprivileged families. So, I would say, it actually is a positive impact to our business.
Marissa Wong: Thank you, T.K. I think there are no more questions to come through, and I'll just give it a couple of seconds. Okay, well we are heading up to time. Thank you everyone for your questions, and thank you T.K. and Alex for the briefing and answering the questions. An archive of this briefing will be available on the IR website later today. My team and I will be available to take any further questions that you may have. But otherwise, thank you all for your attendance. I will now close the briefing. Thank you, and goodbye.
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