Good evening, everybody, and thanks for dialing into this briefing regarding the impairment of goodwill of EnergyAustralia's customer business. My name is Marissa Wong, I'm Director of Investor Relations. I am accompanied by CEO, Mr. TK Chiang, and CFO, Mr. Nicolas Tissot. We've got 45 minutes today, and we'll start with a briefing delivered by Nicolas, and that will be followed by a Q&A session. We will be taking questions live or through the text box function, but please focus your question today off, to the topic of the impairment. It is not our intention to provide a full update of the business on this call. We will be sharing a full set of financial results and a comprehensive update as part of the annual results announcement at the end of February. Also, we are in blackout period, so unfortunately, my team and I are unable to address follow-up questions. So I do encourage you to make the most of this opportunity and engage us on the topic of the impairment. With that, I will now pass over to Nicolas. Thank you, Marissa. Good evening, everybody. Thank you for joining the call with a quite short notice. We launched an announcement earlier today after closing of the Hong Kong Stock Exchange to foreshadow the impairment of part of EnergyAustralia's customer cash generating unit CGU goodwill. As usual, in the closing of the year-end accounts process, an impairment test was undertaken, and while there is a need to finalize calculations, the exercise has indicated a decline in the valuation of the EnergyAustralia customer CGU. The expected impairment is approximately HKD 5.9 billion for the year ended 31 December 2023, from a carrying value amount of goodwill of HKD 8.4 billion. This one-off cash item has no impact on operating earnings of the group. It reflects the recognition, to the best of our knowledge, of the recent evolution of economic reality of the retail environment that EnergyAustralia currently operates. The amount will be taken through the P&L as an item affecting comparability. It is thus expected that we will record it as a charge against total earnings of the CLP Group for the full year 2023. To put this expected impairment in perspective, we want to share that the overall group financial results for 2023 have been strong. Operating earnings before fair value movements are expected to be approximately HKD 10.1 billion, up more than 30% compared to 2022. This was in large part due to the dependable contribution from Hong Kong, a strong financial performance from CLP China, and Apraava Energy continuing to grow profitably, while EnergyAustralia recovered from the heavy losses incurred in 2022 to be expected close to break even in 2023. Group total earnings before EnergyAustralia impairment are expected to be HKD 12.5 billion, including a favorable fair value movement on forward energy contracts of approximately HKD 2.1 billion. Taking into account the goodwill impairment, total earnings are expected to be HKD 6.6 billion, a strong rebound from the low HKD 0.9 billion of 2022. I'd now like to touch on what has led to the impairment charge. The goodwill in our Australian customer CGU arose from the acquisitions of large customer bases back in 2005 and 2011, when there were less price regulations and less pressure on margins. More demanding economic and operating conditions in the Australian retail market have come to bear recently. This has come in the form of higher inflation and interest rates, leading to cost pressures, combined with energy market volatility and intense competition, constraining retail margins. This has led to a revision of our assumptions on retail margins, customer growth, and our weighted average cost of capital, with retail margins revision being the key driver for the impairment. The recent 2023 ACCC report into the National Electricity Market points to continuing pressure on margins and increase in costs for retailers. Retail margins are the percentage of residential cost stack, settled at a low 2.2% for Australian financial year 2022-23, and the average total cost stack for retailers supplying residential customers increased by 7.2% in nominal terms from 2022- 2023. On that basis, we recalibrated our retail margins assumptions accordingly. We also reviewed customer account growth targets and increased our weighted average cost of capital to reflect the evolution in interest rates. With these updated assumptions, the valuation for the customer CGU is reduced. We continue to see value in the retail business, both as a key component of the EnergyAustralia GenTailer integrated model and an important driver of future growth and value streams, albeit at a level more reflective of the recent evolution we've seen in the market.... Overall, EnergyAustralia's financial performance has markedly recovered in 2023 after a very challenging 2022, off the back of improved generation fleet performance and roll-off of low-price forward contracts. Operating earnings before fair value movements are expected to recover from heavy losses of HKD 2.3 billion in 2022 to close to breakeven in 2023. With this impairment, we've recognized the impact of the recent evolution of economic reality of the energy retail sector in Australia on the value of EnergyAustralia customer CGU in our books. As we navigate the energy transition in Australia, the scale and quality of EnergyAustralia's customer base continues to be strategic in underpinning the investment required for the transition of our generation portfolio, and to capture future opportunities and value, including behind the meter, as electrification accelerates. Operationally, group results were strong, and we are confident in EnergyAustralia profitably participating in the clean energy transformation that's happening in Australia. Finally, on a more personal note, I wanted to share that after careful consideration, I will leave the company for personal reasons. Nothing to do with the impairment announcement, but we wanted to be transparent that the CEO succession was happening. I'm proud about my contributions during these almost four very intense years, and I'm happy that an orderly transition was organized with Alexandre Keisser succeeding me. I will be working with him and the executive team to ensure a smooth and effective finance leadership transition through the annual results, which will be my last ones, and leading up to ensuring results. With that, we can now take questions together with TK. Thank you, Nicolas, for that. So I'll open up the lines now and please go ahead and ask your questions if you have any. I think there's Rob. Rob, you have your hands up, so we'll just unmute the line for you. Go ahead. Yes. So good evening, Rob Koh from Morgan Stanley. Thanks for taking my question. I guess, as a starting point, I'm sorry to hear that you will be moving on, Monsieur Tissot, and thank you for all of your help over the years. I guess I just wanted to ask a few clarification questions. The impairment to the EnergyAustralia customer business—should I be... Just to make sure I'm interpreting the statements correctly, that is not any impairment to the generation part of EnergyAustralia, just to the customer side. Is that correct? Absolutely correct. Okay, great. And then in terms of competition, which is one of the drivers for the numerator of this equation, obviously, there's a cost of capital change to the NPV as well. Is that a comment about current conditions in the NEM with, say, discounting and churn rates and things like that? I may be asking an inappropriate question. If so, that's fine. Good evening, Rob. Thanks for the kind personal comment. And yeah, I do confirm that the impairment is an impairment of goodwill of the retail, the customer cash generating unit, which is one of the two cash generating units in our EnergyAustralia operation. So just for clarity, in terms of competition in the NEM market, I think it's been quite a few years of intense competition in that market. But, we've seen in the last few months, especially second part of the year, we've seen confirmation of the intensity of the level of competition, with also new players coming back to the market after the tough challenging year, 2022. So it's kind of adding up to the competitive environment in Australia, and this is putting a pressure on margins. And we felt that was the right time to recalibrate the level of margin we take into account in our valuation model. We have gone through a repricing this year in the market. So it's also an element of our assessment that it's very difficult to transfer the increasing costs in pricing. So the market continued to be very demanding, including in terms of discounts and special offers proposed by every player in order to maintain its market share. Sorry for a bit of a long answer, but your question is complex. Yeah. Yeah. No, it's Australian Utilities. It's, it's always has always been so. All right. Thank you very much for your answers. I'll, I'll, I'll leave it there and let other people get a turn. Thank you so much. Rob. ... Rob, while we wait for others to perhaps put their hands up to ask a live question, I will ask a question that's come through on the text box. Can you elaborate what you mean when you say competition in energy retail markets has intensified, and the outlook is that this competition will remain for a period of time? Does this mean that EnergyAustralia has failed to secure retail contracts? And further, what implications does this have for EnergyAustralia's generation business? Nicolas? Yeah. I think on the first part of your question, yes, we've seen now a level of margin sort of stay at a rather low level. So confirming in the second part of 2023, trends which were existing before, and that's what make us believe that this level of competition is here to last for a period of time. And therefore, we needed to adjust our retail margin assumptions in our models. This is based on the observations mentioned in the most recent ACCC report released in December 2023. So yes, a global environment with significant pressure and we wanted to adjust our assumptions. Regarding the second part of your question, no, this it doesn't mean we have failed to secure retail contracts. It's more the level of margin at which we're able to operate. But I don't think there is any major evolution in the way we were able to retain customers and gain customers compared to the recent trends. So it's more on the level of margin and the outlook in margins that the adjustments have happened, although we have also revised our ambition in terms of gaining additional customers in the future. Implications on EA's generation business, as I briefly mentioned in my introduction, we still see the EA, the EnergyAustralia retail business as part of a portfolio and as part of an integrated GenTailer model. And in particular, we still see that both businesses are sort of hedging each other because it's an element of reduction of volatility in earnings to have our generation business backed by a retail business and vice versa. There's no change in terms of our strategy to manage EnergyAustralia business as an integrated business. Thanks, Nicolas. And, following on another question on the text box, can you elaborate on what you have done to recalibrate the retail margins? Well, I will not be able to disclose the details of our assumptions, but we have mentioned in the announcement the reference of the latest ACCC report with a 2.3% level of retail margin mentioned in the report as the average level in the market in 2023. And you can see it as a reference as one of the key references we used in our valuation. But obviously, this is to be combined with a number of elements, which are specific to EnergyAustralia and which are not necessarily the same for every player in the market. Okay. I don't see any other hands up for live questions. I might just pause for a couple of moments just in case we do get a few in. Otherwise, if there are no other questions, I will conclude the session. A reminder that our results, announcement, and presentation is scheduled for the end of February, so we look... Okay, we've got one coming in from HSBC: Does this impairment affect the sale of EnergyAustralia? I mean, short answer is no. If I understand well the question, but you may want to give us more details about what you mean. No, I think there's no impact on the sales. It's an adjustment of the value of the customer business of Energy Australia in our books, so it's a purely non-cash write-down of goodwill allocated to that activity, to that cash generating unit. So nothing to do with the sales, if that's clarifying this question, but you can further elaborate if this is not exactly your question. A question from Adriana Lowe, from Bank of America: Did it have any implications on dividend decisions? Basically, in principle, it's a non-cash write-down, so it doesn't have any impact on the cash position or the debt position at the end of 2023. As usual, based on the final results of the group, our board will appreciate what level of dividend distribution is to be considered. But I would say this announcement is not expected to have any direct impact on this decision. Thanks. Evan Li from HSBC. For the book value that remains at EA, what businesses or subsets of operations does that represent? Good evening, Evan. Thank you for your question. So we have mentioned that the remaining level of goodwill allocated to the customer CGU is now down after impairment HKD 2.5 billion in our books. And obviously, that's just the goodwill, but we are not disclosing the rest of the book value of the customer business. But you can expect that it's the bulk of it, as most of that business was built by acquisitions. And then the other piece is generation CGU, and there are no other subsets of operations in the book value of EnergyAustralia in CLP books. And I think to add on to that, for the generation business, that there is no goodwill in that business. So- Right. That's additional information. There is no, there is no goodwill, and obviously this business also went through impairment test, as usual at that moment of the year. Thanks, Evan, for your question. Stephen Choi from JP Morgan: How shall we think about the operating outlook for the retail business in Australia? Also, Australia has been facing higher inflation, and we have faced pressure on operating margins over the past two years. Why have we made the impairment in financial year 2023? So, regarding operating outlook, I think the elements we have released today about EnergyAustralia financial performance are in line with the progressive turnaround we talked about over the half year results. So basically, moving along three axes. First one being improving and making the whole supply of Mount Piper more reliable and at a higher level, and this is based on signing a new long-term supply contract earlier in the last year, mid-year. Second is making our Yallourn operation more reliable, more steady, and we had said that it was delivered and continued during the second half. And thirdly, we have adjusted our hedging policy, hedging a smaller proportion of our generation forward. And all these elements combined have delivered the progressive recovery we've seen with EnergyAustralia, and led EnergyAustralia to deliver an operating earnings level before fair value, which is close to breakeven this year. So it's a progressive recovery. It's well underway, but it will continue next year. So our outlook is to continue along the same lines and return to profitability. So in Australia facing higher inflation and pressure on operating margins, yes, it's been the case. I mean, these trends, as I mentioned earlier, appeared already earlier in the last few years. But the difference in the second part of this year is that they really combined with other constraining factors, such as increased inflation, difficulty to pass this inflation through to the customer, higher interest rates. So it was combined with a number of other factors which led us-... To trigger an impairment and the modifications in the assumptions in the model in terms of operating retail operating margins were adjusted based on the combination of these trends, not only the intensity of competition in the market. So it's a combination of factors. Yeah, maybe I... This is TK. So maybe I just want to make a supplementary point about, you know, our outlook. Because, you know, we, we adopt, you know, this GenTailer, kind of, you know, integrated model in the Australian market. So basically, we see the retail customer business as a strategic asset for us, in particular, you know, in New South Wales, in Victoria, where we have, you know, quite a different generation portfolio. And so we see this as a very important, you know, asset. And also going forward, because of decarbonization, climate change, we do see growth opportunities, where there are more electrification accelerating in the future. So we do see opportunities in all the retail, you know, customer business in Australia. Thank you, TK. There's a question that comes through from Jordan Livco about the coal supply situation at Mount Piper. We will address that in full when we present our full set of results at the end of February. So, stay tuned for that. And if there is no other questions, hopefully, we have addressed most of your concerns or questions, but there will be, again, a full opportunity to engage at the end of February when we do announce our full set of results for financial year 2023. An archive of this briefing call will also be available on the IR website. And with that, thank you, Nicolas, thank you, TK, for your time and answering questions. Thank you everybody on the call for attending. I will now close the briefing. Thank you. Thank you.