~~Table~~FORM of6-K ~~Contents~~

~~FORM~~SECURITIES ~~6-K~~AND EXCHANGE COMMISSION

~~SECURITIES~~Washington, ~~AND~~D.C. ~~EXCHANGE COMMISSION~~20549

~~Washington,~~Report ~~D.C.~~of ~~20549~~Foreign Private Issuer

~~Report~~Pursuant ofto ~~Foreign~~Rule ~~Private~~13a-16 ~~Issuer~~or 15d-16 of

~~Pursuant~~the toSecurities ~~Rule~~Exchange ~~13a-16~~Act ~~or 15d-16~~ of 1934

For the ~~Securities~~month ~~Exchange Act~~ of ~~1934~~March 2007

~~For~~CLP ~~the~~Holdings ~~month~~Limited ~~of September 2006~~

~~CLP~~(Registrant’s ~~Holdings~~name ~~Limited~~in English)

~~(Registrant’s~~147 ~~name~~Argyle ~~in English)~~ Street

~~147~~Kowloon, ~~Argyle~~Hong ~~Street~~ Kong

~~Kowloon,~~(Address ~~Hong~~of ~~Kong~~Registrant’s principal executive office)

~~(Address~~Indicate ofby check mark whether the Registrant’s ~~principal~~files ~~executive~~or ~~office)~~will file annual reports under cover Form 20-F or Form 40-F.

~~Indicate by check mark whether the Registrant files or will file annual reports under cover~~ Form 20-F or X Form 40-F.

Indicate by check mark whether the Registrant by furnishing this information contained in this Form 20is also thereby furnishing information to the Commission pursuant to Rule 12g3-~~F X Form 40-F~~ 2(b) under the Securities Exchange Act of 1934.

Indicate by check mark whether the Registrant by furnishing this information contained in this Form is also thereby furnishing information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. Yes No X

If “Yes ” is marked, indicate below the file number assigned to the Registrant in connection with Rule 12g3-2(b): ~~No X~~ 82-

IfRegistrant ~~“Yes”~~hereby isincorporates ~~marked,~~by ~~indicate~~reference ~~below~~in the ~~file~~report ~~number assigned~~on toForm 6-K the ~~Registrant~~following ~~in connection with Rule 12g3-2(b)~~Exhibits: ~~82-~~

~~Table~~Exhibits ~~of Contents~~

~~Registrant~~1. ~~hereby~~CLP ~~incorporates~~Holdings byAnnounces ~~reference~~Appointment inof ~~the report on Form 6-K the following Exhibit:~~ Directors

~~Exhibit~~2.* Announcement of Annual Results as from 1 January 2006 to 31 December 2006 issued on 28 February 2007.

~~The Interim Report 2006 which was despatched to shareholders on 1 September 2006~~3. Discloseable transactions

2* The financial information relating to the financial year ended 31 December 2006 set out in the Announcement does not constitute the Group’s statutory financial statements for the year ended 31 December 2006, but is derived from those financial statements. Further information regarding the operations and results of CLP Holdings Limited for the financial year ended 31 December 2006 will be included in the Annual Report on Form 20-F for the year ended 31 December 2006 to be filed with the U.S. Securities and Exchange Commission.

~~Table~~2 ~~of Contents~~

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


For and on behalf of
CLP HOLDINGS LIMITED

By:		/ s / April Chan
Name:		April Chan
Title:		Company Secretary

Date: 2127 ~~September~~March ~~2006~~2007

~~Table~~Exhibit of1 ~~Contents~~

LOGO

CLP’s ~~vision~~Holdings isAnnounces toAppointment beof aDirectors ~~leading investor-operator in the Asia-Pacific electric power sector.~~

~~HIGHLIGHTS~~CLP •Holdings ~~Electricity~~Limited ~~sales in Hong Kong grew 0.8% to 13,300GWh; total sales~~ (~~which~~“CLP ~~include~~Holdings”) ~~sales~~announces to the ~~Chinese~~appointment ~~mainland) rose 0~~of Mr.5% Peter toTing ~~15,414GWh.~~Chang •Lee ~~Consolidated revenue rose 30~~J.9%P. toas ~~HK$21,412~~Independent ~~million;~~Non-executive ~~revenue~~Director ~~from~~and ~~our business in Hong Kong recorded a 2~~Mr.6% Peter ~~growth~~William toGreenwood ~~HK$14,061~~as ~~million.~~Executive •Director ~~Earnings~~of ~~from~~CLP ~~our~~Holdings ~~electricity business in Hong Kong increased by 1.8%~~ to ~~HK$3,573~~take ~~million;~~effect ~~earnings~~ from ~~other activities (including a one-off gain of HK$291 million) grew by 50.2% to HK$~~1~~,568~~ March ~~million~~2007. ~~• Total earnings up 7.9% to HK$4,975 million; operating earnings (which exclude Hok Un redevelopment profit) up 11.2% to HK$4,936 million. • Second interim dividend of HK$0.50 per share.~~

~~CONTENTS~~Mr. Peter Ting Chang Lee J.P.

Performance Highlights		1
Chairman’s Statement		3
Management’s Discussion and Analysis
Business Overview		7
Operational Performance		13
Financial Performance		22
Condensed Consolidated Income Statement		32
Condensed Consolidated Balance Sheet		33
Condensed Consolidated Statement of Changes in Equity		35
Condensed Consolidated Cash Flow Statement		36
Notes to the Condensed Consolidated Interim Accounts		37
Scheme of Control Statement		61
Independent Review Report		62
Corporate Governance		63
Information for our Investors		72

Mr. Lee, aged 53, holds a Bachelor of Science Degree in Civil Engineering from the University of Manchester, United Kingdom. He is also a qualified solicitor of the Supreme Court of England and Wales.

~~Table~~Mr. Lee is the Chairman of ~~Contents~~Hysan Development Company Limited. He is also a Non-executive Director of Cathay Pacific Airways Limited, Hang Seng Bank Limited, SCMP Group Limited and Maersk China Limited.

Mr. Lee is also Vice President of the Real Estate Developers Association of Hong Kong, Council Member of Asia Business Council, Council Member of the Employers’ Federation of Hong Kong, Advisory Board Member ~~Performance~~of ~~Highlights~~The Salvation Army Hong Kong, International Council member of INSEAD, the Governor of Lee Hysan Foundation and a non-official Justice of the Peace.

	6 months ended 30 June				Increase/ (Decrease)
	2006		2005(restated	)(1)	%
Per share
Earnings per share, HK$
Including Hok Un redevelopment profit	2.07		1.91		7.9
Excluding Hok Un redevelopment profit	2.05		1.84		11.2
Dividends per share, HK$
First interim	0.50		0.48
Second interim	0.50		0.48
Total interim dividends	1.00		0.96		4.2
For the period
Revenue, HK$M
Hong Kong (HK) business	14,061		13,704		2.6
Businesses outside HK	7,351		2,657		176.7
Total	21,412		16,361		30.9
Earnings, HK$M
Electricity business in HK	3,573		3,510		1.8
Other investments/activities
Sales to Chinese mainland from HK	55		63
Generating facilities in Chinese mainland serving HK (2)	347		431
Other power projects in Chinese mainland	106		95
Energy business in Australia	287		(8	)
Electricity business in India	371		279
Power projects in Southeast Asia and Taiwan	142		185
Renewable energy business	(25	)	4
Other businesses	(6	)	(5	)
One-off gain on formation of OneEnergy	291		—
	1,568		1,044		50.2
Unallocated net finance costs	(122	)	(43	)
Unallocated Group expenses	(83	)	(74	)
Total operating earnings	4,936		4,437		11.2
Hok Un redevelopment profit	39		174
Total earnings	4,975		4,611		7.9
Electricity sales (CLP Power HK), millions of kWh
Residential	3,063		3,114		(1.6	)
Commercial	5,526		5,259		5.1
Infrastructure & Public Services	3,434		3,529		(2.7	)
Manufacturing	1,277		1,291		(1.0	)
Total local sales	13,300		13,193		0.8
Export sales	2,114		2,145		(1.4	)
Total electricity sales	15,414		15,338		0.5
Interest cover (3), times	8		10
As at balance sheet date, HK$M	30 June 2006		31 December2005(restated	)(1)	Increase%
Total assets, including leased assets	126,527		123,622		2.3
Total borrowings	29,582		29,391		0.6
Obligations under finance leases	23,482		21,497		9.2
Shareholders’ funds	51,985		50,285		3.4
Total debt to total capital (4), %	36.2		36.8

As at the date of this announcement, Mr. Lee does not have any interest in CLP Holdings shares within the meaning of Part XV of the Securities and Futures Ordinance nor any relationships with any directors, senior management or substantial or controlling shareholders of CLP Holdings. Mr. Lee does not hold any other position with CLP Holdings or any other member of the group of companies of which CLP Holdings forms part. In view of these, the Directors have determined that Mr. Lee is independent.

~~Page~~As 1an Independent Non-executive Director, Mr. Lee will be entitled to receive Directors’ fees of HK$200,000 per annum together with the additional fees for any service on Committees of the Board, as set out in the Remuneration Report (page 113), which forms part of CLP Holdings’ Annual Report 2005 and is available on CLP website www.clpgroup.com.

~~Table~~1 ~~of Contents~~

~~Notes:~~Mr. Peter William Greenwood

Mr. Greenwood, aged 50, holds an MA degree in law from the University of Cambridge and a diploma in German law and legal system from the University of Tuebingen and the Justice Ministry of North Rhine-Westphalia. In 2006, he completed full-time study for an MA degree in War Studies from King’s College, London University (1with distinction). ~~2005~~He ~~figures~~is ~~have~~a ~~been~~Fellow ~~restated~~of ~~following~~The ~~the~~Institute ~~adoption~~of Chartered Secretaries in England and a Fellow of ~~HKFRS–Interpretation~~The 4Hong onKong ~~lease~~Institute ~~accounting~~of Chartered Secretaries. Mr. Greenwood is a solicitor in England and Wales and in Hong Kong, as well as being qualified as an avocat in France.

~~(2)~~Before joining ~~This~~the ~~represents~~CLP ~~earnings~~Group ~~contribution~~in ~~from~~1995, ~~our~~he ~~investments~~was ina ~~Guangdong~~Senior ~~Nuclear~~Commercial ~~Power~~Lawyer ~~Joint~~with ~~Venture~~the ~~Company,~~Provisional ~~Limited~~Airport ~~and~~Authority, Hong Kong, ~~Pumped~~and ~~Storage~~prior ~~Development~~to ~~Company,~~that ~~Limited,~~was ~~whose~~in ~~generating~~private ~~facilities~~practice ~~serve~~as a solicitor with leading corporate law firms in London, Hamburg, Hong Kong and Paris.

Prior to stepping down in 2005, Mr. Greenwood was an Executive Director (3since 2001), ~~Interest~~the ~~cover~~Company =Secretary ~~Profit~~and ~~before~~Corporate ~~taxation~~Counsel (since 1996) of CLP Holdings. As such he was responsible for the CLP Group’s corporate secretarial and ~~interest/(interest~~legal ~~charges~~affairs, +including ~~capitalised~~advising ~~interest)~~the Chairman and Board on corporate governance issues and compliance.

~~(4)~~With ~~Total~~effect ~~debt~~from 1 March 2007 Mr. Greenwood will be taking up a new role as Executive Director – Strategy of CLP Holdings, reporting to ~~total~~the ~~capital~~Chief Executive =Officer. ~~Debt/(shareholders~~Mr. Greenwood’s ~~funds~~principal +focus ~~debt~~will +be ~~minority~~to ~~interest)~~work on matters of a strategic nature impacting the overall direction of the CLP Group. ~~Total~~Mr. Greenwood ~~debt~~will ~~excludes~~also ~~obligations~~serve ~~under~~as ~~finance~~a ~~leases~~Member of the Finance & General Committee and the Social, Environmental & Ethics Committee of the Board.

~~Page~~As 2an Executive Director of CLP Holdings, Mr. Greenwood will not be entitled to any Directors’ fees for serving on the Board and Board Committees. Being a Senior Management member of CLP Holdings, Mr. Greenwood will receive a base compensation of HK$4.6 million per annum and be entitled to a performance bonus, the level of which is set by the Human Resources & Remuneration Committee having regard to the performance of the CLP Group and the individual concerned. As for other Directors, details of the remuneration paid to Mr. Greenwood will be disclosed in the Company’s Annual Report.

~~Table~~As at the date of ~~Contents~~this announcement, Mr. Greenwood does not have any interest in CLP Holdings shares within the meaning of Part XV of the Securities and Futures Ordinance nor any relationships with any directors, senior management or substantial or controlling shareholders of CLP Holdings.

~~Chairman~~In accordance with CLP Holdings’s ~~Statement~~Articles of Association, Mr. Peter Lee and Mr. Peter Greenwood will stand for election by shareholders at the 2007 Annual General Meeting.

~~Dear~~Save ~~Shareholders~~for the information set out above, there is no other information to be disclosed pursuant to any of the requirements of the provisions under Rule 13.51(2) of the Listing Rules nor are there other matters that need to be brought to the attention of shareholders in relation to the appointment of these two Directors.

IBy amOrder ~~pleased~~of ~~to present our Interim Report for~~ the ~~six~~Board ~~months~~April toChan ~~30 June~~Company ~~2006.~~ Secretary

~~Financial~~Hong ~~Results~~Kong, ~~for~~26 February ~~the~~2007 ~~Six-month Period~~

~~CLP Group’s total operating earnings for the first half of 2006 increased by 11.~~2% to HK$4,936 million, as compared to the corresponding period in 2005. Included in the total operating earnings is a one-off item relating to a premium gain of HK$291 million on the formation of OneEnergy.

~~The growth in these earnings mainly arose from our investments in the electricity sector in the Asia-Pacific region. It is encouraging to note that~~ CLP’s ~~policy~~Holdings ~~of diversifying~~Limited ~~its business beyond our home base in Hong Kong, which we have been pursuing for several years, is now contributing to the delivery of significant and ongoing value to our shareholders.~~

~~The~~(incorporated ~~total~~in ~~earnings,~~Hong ~~which~~Kong ~~include~~with ~~Hok~~limited Unliability) ~~redevelopment profit, amounted to HK$4,975 million, representing a growth of 7.9%.~~

~~Further~~(Stock ~~details~~Code: of002) ~~the financial and operational performance of the Group in the first six months of 2006 are set out in the Management’s Discussion and Analysis, which forms part of this Interim Report.~~

InNon-executive ~~this~~Directors: ~~Chairman’s~~The ~~Statement~~Hon. Sir Michael Kadoorie, Mr. W. E. Mocatta, Mr. J. S. Dickson Leach, Mr. R. J. McAulay, Mr. J. A. H. Leigh, Mr. R. Bischof, Mr. I. ~~wish~~D. toBoyce, ~~look~~Mr. ~~forward~~P. ~~and~~C. ~~explain~~Tan ~~the~~(Mr. ~~outlook~~Bradley ~~for~~W. ~~the~~Corson ~~CLP~~as ~~Group~~his alternate), ~~including the~~Mr. ~~key~~Jason ~~tasks~~Whittle and ~~issues~~Dr. toY. ~~which~~B. ~~the~~Lee ~~Board~~Independent Non-executive Directors: The Hon. Sir S. Y. Chung, Dr. William K. Fung, Mr. V. F. Moore, Mr. Hansen C. H. Loh, Mr. Paul M. L. Kan, Professor Judy Tsui and ~~Management~~Sir ~~will~~Rod beEddington ~~giving~~Executive ~~particular~~Directors: ~~attention~~Mr. ~~during~~Andrew ~~the~~Brandler ~~second~~and ~~half~~Mr. ofPeter ~~the~~P. ~~year~~W. Tse

~~Hong~~3 ~~Kong – Regulatory Regime~~

~~Shareholders~~Exhibit ~~will~~2 recall that the Hong Kong Government initiated a two-stage public consultation process on the future of Hong Kong’s electricity industry, as an important step in the development of the regulatory regime for the electricity sector upon the expiry of the current Scheme of Control agreement in 2008.

LOGO

~~The Stage II Consultation ended on 31 March 2006. CLP and Government have commenced discussions on the post-2008 regulatory arrangements. CLP would like to see~~ ~~these~~Announcement discussions move forward as soon as possible. The electricity industry provides a vital service to Hong Kong. It is an industry which demands ongoing, large-scale investment and long-term planning. 2008 is fast approaching. In order to ensure the continuing security, quality and efficiency of ~~Hong~~Annual ~~Kong’s~~Results ~~electricity supply through to the end of this decade and beyond, it is critical that the future regulation of the power industry be clarified in a timely manner to remove unnecessary uncertainties.~~

~~Whilst~~as Ifrom ~~cannot~~1 January ~~predict~~2006 ~~the~~to ~~outcome~~31 December of2006 ~~the discussions between CLP and Government, I can say with certainty that CLP will adopt a constructive, positive and realistic approach in these negotiations.~~

~~Page~~Highlights • Electricity sales in Hong Kong grew 0.6% to 29,561GWh; total sales (which include sales to the Chinese mainland) also rose 0.6% to 34,089GWh. • Consolidated revenue rose 18.7% to HK$45,702 million; revenue from our Hong Kong electricity business recorded a 3.5% growth to HK$29,293 million. • Earnings from our Hong Kong electricity business increased by 3.4% to HK$7,290 million. • One-off net gain of HK$408 million after income tax from transfer of our interests in BLCP to EGCO and formation of OneEnergy, offset by an impairment provision on Yallourn Power Station, Australia. • Operating earnings up 7.7% to HK$9,856 million; total earnings of HK$9,900 million (which include Hok Un redevelopment profit of HK$44 million) 13.3% lower than 2005, which included a one-off tax consolidation benefit of HK$2,004 million from our Australian business. • Final dividend and special final dividend of HK$0.89 per share and HK$0.02 per share respectively; including interim dividends paid, total dividends for 2006 amount to HK$2.41 per share (2005: HK$2.38 per share).

~~Table~~CHAIRMAN’S ofSTATEMENT ~~Contents~~

AtIn ~~its heart, our position is quite straightforward –~~ the ~~existing~~Chairman’s ~~Scheme~~Statement ofwhich ~~Control~~introduced ~~has~~our ~~served~~2005 ~~Hong~~Annual ~~Kong~~Report, ~~extremely well.~~I ~~Together~~expressed ~~with~~the ~~strong~~belief ~~environmental~~that ~~performance,~~2006 itwould ~~has~~be ~~enabled~~an ~~our~~extremely ~~community~~important ~~to enjoy a first-class~~ and ~~reliable~~challenging ~~electricity~~year ~~service~~for atCLP ~~reasonable~~- ~~tariffs,~~whether ~~whilst offering fair returns to the investors who have funded the necessary investments~~ in ~~the~~terms ~~Special Administrative Region’s electricity infrastructure. The merits~~ of the ~~Scheme~~shaping of ~~Control are visible, measurable and enduring. We will work hard with Government to amend~~ the ~~existing arrangements, where this is necessary to~~future ~~reflect~~electricity ~~changes~~regulatory ~~and~~regime ~~challenges~~in ~~arising from the economic and social development of~~ Hong Kong~~. However~~, itthe iseffective ~~important~~management ~~that~~of ~~the~~our ~~post-2008~~assets ~~arrangements~~elsewhere ~~retain~~or ~~the~~in ~~present~~meeting ~~balance between~~ the ~~interests~~expectations of ~~CLP’s~~society ~~shareholders,~~for ~~our customers and~~ the ~~community~~ asresponsible amanagement ~~whole,~~of ~~and that these arrangements promote continued excellence in~~ the ~~electricity~~environmental ~~supply,~~aspects onof ~~which~~our ~~Hong Kong’s well-being depends~~business.

~~Hong~~In ~~Kong~~2006, –your ~~Liquefied~~Company ~~Natural~~faced ~~Gas~~up ~~(LNG)~~to these challenges squarely and effectively and, as our results for the year indicate, continued to create and deliver value to our shareholders.

AOur ~~good~~Annual ~~example~~Report ofand the ~~long-term~~accompanying ~~decision-making~~Social ~~which~~and ~~the~~Environmental ~~electricity~~Report ~~business~~explain, ~~requires~~in ismuch ~~the~~greater detail, CLP’s ~~steps~~progress weduring ~~are~~the ~~taking~~past toyear ~~bring~~and ~~LNG~~the tooutlook ~~Hong~~for ~~Kong~~the inyears ~~order~~ahead. toIn ~~succeed~~this ~~the~~Chairman’s ~~depleting~~Statement, ~~gas~~I ~~resource~~wish into ~~the~~concentrate ~~South~~on ~~China~~the ~~Sea~~status ~~that~~of isthose ~~currently~~major ~~supplying~~challenges ~~the~~which ~~Black~~I ~~Point~~highlighted ~~Power~~last ~~Station~~year.

~~The~~Post-2008 ~~completion~~Regulatory ofRegime anfor ~~LNG~~our ~~receiving terminal in~~ Hong Kong ~~and~~Electricity ~~the~~Business ~~availability of LNG supply by 2011 are crucial to our customers from the perspective of both environmental performance and reliability of electricity supply.~~

~~The~~During ~~Environmental~~the ~~Impact~~year, ~~Assessment~~the ~~(EIA)~~Hong ~~studies~~Kong ~~for~~Government ~~two~~concluded ~~potential~~Stage ~~sites~~II ~~for~~of its public consultation on the ~~LNG~~future ~~receiving~~of ~~terminal~~Hong ~~are~~Kong’s ~~scheduled~~electricity ~~for~~business, ~~completion~~in light of the expiry in ~~August this~~2008 ~~year.~~of Bythe ~~early~~Scheme ~~2007~~of weControl ~~must~~(SoC) ~~have~~agreement ~~the~~which ~~site~~regulates ~~acquired~~that business. ~~and~~As ~~relevant~~shareholders ~~government~~know, ~~approvals~~CLP has been an active participant in ~~place,~~the sopublic ~~that~~debate ~~commercial~~on ~~contracts~~our ~~can~~industry. beWe ~~awarded~~are tonow ~~tie~~engaged in discussions with ~~the~~Government ~~significant~~on ~~amount~~the ofpost-2008 ~~work~~arrangements. ~~required~~Although bythis ~~the~~is ~~suppliers~~not ona ~~upstream~~process ~~gas~~which ~~development~~we control, there is a ~~shipbuilding~~reasonable ~~and~~prospect ~~site~~that ~~construction~~the future regulatory framework will be settled during the course of 2007.

~~Our~~We ~~timetable~~have ~~for~~maintained ~~this project is challenging but achievable. It is right that~~ a ~~project~~positive ~~of this size~~ and ~~nature~~constructive ~~should~~approach ~~be subject~~ to ~~Government~~our ~~oversight~~dialogue ~~and~~with ~~approval. We have kept~~ Government, ~~informed~~based ofon our ~~plans~~longstanding ~~from~~view athat ~~very~~preserving ~~early stage, starting almost three years ago, including~~ the ~~importance~~quality of ~~the arrival of LNG in~~ Hong Kong’s byelectricity ~~the~~service ~~end~~requires ofa ~~this~~stable ~~decade.~~and ~~As the~~long-term ~~EIA~~regulatory ~~studies~~regime ~~are~~which ~~being~~continues ~~completed, we will be consulting the public and we will continue~~ to ~~work~~strike ~~hard~~a ~~with~~fair ~~various~~balance ~~government~~between ~~bureaux and departments throughout~~ the interests ~~second half~~ of ~~this~~all ~~year to ensure that the LNG project stays firmly on course~~stakeholders.

We must not lose sight of the outstanding quality of the electricity supply which CLP delivers to the Hong Kong –community under ~~Emissions~~the ~~Reductions~~present SoC - a supply which is world-class in terms of reliability, cost-effectiveness, affordability, customer service and environmental performance. It is vital that these achievements are recognised and safeguarded.

~~Our~~We ~~Hong~~must ~~Kong power~~give ~~plants~~proper ~~recorded~~regard ato ~~substantial~~the ~~reduction~~legitimate interests of ~~emissions~~the ~~during~~investors in the ~~first~~electricity ~~six~~sector. ~~months~~Hong ofKong’s electricity infrastructure has been funded entirely by the ~~year~~private sector. ~~This~~It isreceives ~~largely~~no ~~due~~financial tosupport ~~the~~from ~~increased~~Government, ~~use~~directly or even indirectly. The nature of ~~ultra~~our business, involving forward planning and large-~~low~~scale ~~sulphur~~investment ~~coal,~~in ~~which~~plants isand byassets ~~far~~whose economic life may last over decades, depends on the ~~cleanest~~support ~~coal~~of our capital providers – both shareholders and lenders, all of whom have many alternatives available ~~around~~as ~~the~~to ~~world~~how ~~for~~and ~~power generation~~where they invest their funds.

WeIn ~~are~~the ~~moving~~electricity ~~forward~~industry, ~~with~~investors’ decisions can be influenced by factors such as longer-term regulatory and commercial uncertainty, fuel availability and pricing, the ~~retrofit~~prospect of ~~additional~~intervention ~~emissions~~by governments, ~~reduction~~unpredictable ~~facilities~~and atpunitive ~~Castle~~environmental ~~Peak~~policy ~~Power~~and ~~Station~~market development activities. WeContinued ~~have~~investor ~~submitted~~support ~~the~~for ~~EIA report~~Hong Kong’s electricity business requires such risks to be clearly defined, mitigated where possible and fairly allocated between industry stakeholders, including Government, shareholders and consumers. If investors’ interests are onnot ~~track~~properly respected in the regulatory balance, the danger is that an environment will be created where investments are not made at all, or at the least, are made just too late, rather than just in time, with ~~our~~corresponding ~~front~~consequences ~~end~~for ~~work~~reliability of supply.

~~Our~~In ~~present~~the ~~programme~~long run, ~~envisages~~the ~~four~~interests ~~major~~of ~~emissions~~investors ~~reduction~~and ~~facilities~~consumers ~~being~~are ~~completed from~~complementary, ~~2009~~not ~~onwards~~contradictory. ~~This~~Over isthe apast ~~challenging~~40 ~~programme~~years, ~~given~~ the ~~significant~~SoC ~~demolition~~has ~~and~~ensured ~~plant~~that ~~relocation~~our ~~work~~investors ~~needed,~~are ~~and~~fairly rewarded for their commitment in funding the ~~required~~timely ~~operation~~and adequate provision of ~~these~~Hong Kong’s ~~units~~electricity toinfrastructure, ~~meet~~whilst our community has enjoyed the ~~summer~~benefits, ~~peak~~through ~~demand~~reasonable ~~means~~tariffs, ~~that~~reliability ~~much~~and environmental performance of the ~~work~~responsible ~~must~~operation beof ~~carried~~that ~~out in winter~~infrastructure.

~~Page~~In 4our submissions to Government during the public consultation process and in our ongoing discussions, we have stressed the importance of recognising and balancing the interests of all stakeholders, including CLP and its investors. I remain confident that the outcome of the dialogue with Government, and public and political scrutiny of the agreement which eventually emerges, will reflect a shared determination to ensure that Hong Kong’s people continue to enjoy a world-class electricity supply, by safeguarding the achievements already made under the SoC and putting in place a durable regulatory framework which allows us to build on those achievements.

~~Table~~Environmental ofPerformance ~~Contents~~

WeThe ~~believe~~promotion ~~that~~of ~~our~~ongoing ~~efforts~~improvement in ~~reducing~~the ~~emissions~~environmental ~~can~~performance ~~only~~of beour ~~effective~~Hong inKong ~~improving~~electricity ~~air~~business, ~~quality~~above asall ~~part~~with ofrespect ato ~~wider~~air ~~and sustained~~emissions ~~effort~~from byour ~~governments~~power onstations, ~~both~~will ~~sides~~be ofan ~~the~~important ~~boundary~~element ~~and all sectors~~ of the post-2008 ~~community~~regulatory toframework. ~~improve~~We ~~air~~need ~~quality~~clear ~~throughout~~policy ~~the~~direction ~~Pearl~~regarding ~~River~~Hong ~~Delta~~Kong’s ~~air~~long-term ~~shed.~~fuel ~~In line with this~~mix, ~~CLP~~supported ~~was~~by ~~one~~emissions ofregulations ~~the~~and ~~early~~standards ~~supporters~~that ofrecognise the ~~Clean~~role ~~Air~~of ~~Charter established~~each inof ~~2005 by~~ the ~~business~~components ~~community~~of inthat ~~Hong~~fuel ~~Kong,~~mix and ~~which~~the ~~now~~technical ~~binds~~and operating ~~more~~capabilities ~~than 280 leading businesses~~ and ~~organisations~~constraints inassociated ~~Hong~~with ~~Kong~~electricity ingeneration afrom ~~shared~~coal, ~~commitment to develop and implement fair~~gas, ~~practical~~nuclear and ~~cost-effective~~renewable ~~environmental~~energy ~~and emissions management policies~~sources.

~~Asia~~Government, –on ~~OneEnergy~~behalf of the community, will need to support and facilitate the actions necessary to implement its policy decisions. For example, if Government wishes to reduce over time the role of coal-fired generation in Hong Kong, then it must allow the steps necessary to bring liquefied natural gas (LNG) in as a replacement fuel source, such as the establishment in Hong Kong of an LNG receiving terminal. Backing this must be a regulatory regime which enables us to enter long-term contracts with overseas gas suppliers and which promotes the investments needed to further reduce emissions from our generating plant and to fully exploit the potential for use of LNG.

~~The~~Despite ~~success~~uncertainties ofabout ~~“OneEnergy”,~~the ~~our~~electricity ~~recently-established~~regulatory ~~50:50~~framework, ~~joint~~we ~~venture~~made ~~with~~progress ~~Mitsubishi~~in ~~Corporation~~2006 ofin ~~Japan,~~the ~~will~~preparatory bework for ~~measured~~bringing byan ~~its~~LNG ~~ability~~receiving terminal to ~~combine~~Hong ~~the~~Kong ~~two~~and ~~partners’~~entering ~~expertise~~into gas supply agreements. Our emissions reduction programme at Castle Peak Power Station also moved forward, ~~capital~~with ~~and~~the ~~local~~issue ~~relationships~~of toan ~~expand~~environmental permit for the construction works. The ~~its~~retrofitting ~~presence~~of inemissions reduction equipment at the ~~power~~station ~~sector~~with inthe ~~Southeast~~latest ~~Asia~~technology will allow us to maximise the reduction of emissions of NOx and ~~Taiwan~~SO2 from our coal-fired units.

InEnvironmental issues, including the ~~coming~~risks ~~months,~~associated wewith ~~aim~~climate change, will continue to ~~complete~~have ~~OneEnergy~~a growing impact on CLP’s ~~integration~~activities ~~period,~~beyond ~~with~~Hong Kong. They offer both challenges and opportunities. I am encouraged by the ~~establishment~~ success of ~~key~~the ~~policies~~CLP Renewables Group, ~~procedures~~which ~~and~~was ~~systems,~~established asin ~~well~~June as2005, ~~the~~in ~~further~~managing ~~injection~~and developing CLP’s portfolio of renewable energy assets. ~~currently~~We ~~owned~~have byan ~~the~~increasing ~~joint~~presence ~~venture~~and ~~partners.~~expertise Atin this field, both in terms of the ~~same~~types ~~time,~~of renewable energy generation which we ~~shall~~develop be(hydro, ~~looking~~wind toand, ~~see~~more ~~progress~~recently, inbiomass) and the ~~pursuit~~diversity of countries ~~new~~in ~~development~~which ~~and~~we ~~acquisition~~ own or are pursuing renewable energy opportunities,. soOur ~~that~~efforts ~~OneEnergy~~in ~~starts~~this area are starting to ~~deliver~~receive oninternational ~~its~~recognition, ~~potential~~as evidenced by CLP being named as an“Corporate ~~effective~~Developer ~~platform~~of ~~for~~the ~~enhancing~~Year” ~~our~~in ~~stake~~the Euromoney and Ernst & Young Global Renewable Energy Awards 2006. We are in ~~its~~the ~~target~~process ~~markets~~of ~~and~~building ~~generating~~a ~~added~~position ~~value~~as toa ~~its~~leading ~~shareholders~~developer of renewable energy in Asia.

~~Australia~~In our Social and Environmental Report we describe CLP’s environmental performance in greater depth, together with the community initiatives which CLP pursues wherever we carry on business – ~~TRUenergy~~all as part of our commitment to be a responsible energy supplier, adding value to the communities to which we belong.

~~The~~Operating ~~process of integrating, within TRUenergy,~~ our ~~existing~~Assets Yallourn business with the merchant energy business acquired last year from Singapore Power has made significant progress. Over the latter half of this year we will be monitoring the success of this exercise in delivering operating cost savings and providing an organisation capable of responding effectively and rapidly to the challenges and opportunities of Australia’s power business and growing its share of that business.

~~Major~~Our ~~activities~~long-term ~~will~~success, ~~include~~and ~~the~~our ~~retention~~credibility ofvis-à-vis ~~retail~~all ~~market~~the ~~share~~stakeholders in our business, be they shareholders, governments, communities and customers, depend on the ~~core~~effective ~~Victoria~~management, operation and ~~South~~maintenance ~~Australia~~of ~~markets~~our assets. WeThe Board ~~will~~and ~~aim~~I towere ~~progress~~encouraged ~~expansion~~by ~~opportunities~~CLP’s performance in ~~New~~2006, ~~South~~as ~~Wales~~demonstrated by objective measures and standards, insuch ~~conjunction~~as ~~with~~the availability of our ~~400MW~~generating ~~Tallawarra~~plant, ~~combined-cycle gas-fired~~the ~~power~~reliability ~~station~~of ~~which~~our ~~has~~transmission ~~moved~~systems ~~into~~and ~~construction~~the ~~this~~quality ~~year~~of our customer service. In Hong Kong, asour ~~well~~performance asin ~~exploring~~these ~~the~~areas ~~opportunity~~is toone ~~enter~~of the ~~Queensland~~strongest ~~market,~~factors ~~which~~in ensuring continued support from the ~~government~~community ~~has~~for ~~announced~~CLP’s ~~will~~role bein ~~open~~providing tothem ~~full~~with ~~retail~~an ~~contestability~~essential inpublic ~~mid-2007~~service.

InElsewhere, ~~addition~~in toAustralia, ~~substantial~~the ~~and~~Chinese ~~positive~~mainland, ~~developments~~Taiwan, onThailand ~~each~~and ofIndia, ~~the~~demonstrable ~~issues~~expertise ~~that~~in Ithe ~~have~~operation ~~highlighted~~of inour ~~this~~assets ~~Chairman’s~~confirms ~~Statement~~our standing, ~~the~~with ~~Board~~our business partners and Ilocal ~~will~~and benational ~~looking~~governments, ~~for progress~~as ona ~~the~~competent ~~other~~and ~~projects~~responsible energy provider with the ability and ~~development~~commitment ~~opportunities~~to wemeet ~~have~~our inengagements ~~hand,~~to ~~such~~them asand to the ~~construction~~communities ofwe ~~our~~serve. 1However,~~200MW~~ ~~coal-fired~~fatal ~~power~~accidents ~~station~~to contractors’ staff at Yallourn, Anshun and Fangchenggang induring the ~~Chinese~~last ~~mainland~~quarter ~~and~~of ~~our~~2006 ~~renewable~~served ~~energy~~as ~~projects.~~tragic ~~And~~reminders atof ~~all~~the ~~times,~~need weto ~~must~~ maintain ~~the~~safety ~~foundations~~disciplines ofand ~~our~~reinforce ~~business,~~a ~~namely~~safety ~~continued~~culture ~~excellence~~which inembraces ~~plant~~all ~~and~~those ~~system~~who ~~operation,~~work ~~customer~~at ~~service,~~our ~~safety~~power ~~and~~stations. ~~environmental~~I ~~performance,~~have asasked ~~well~~for asa thorough ~~financial~~review ~~discipline~~of ~~and~~our ~~prudence~~policies –and ~~the~~practices ~~core~~in ~~attributes~~this onarea. ~~which~~The ~~CLP’s reputation~~Board and ~~long-term~~I ~~success~~will ~~rests~~be looking for an improved safety performance in 2007.

~~Page~~Year 52006 – Financial Results

~~Table~~The careful and responsible stewardship of ~~Contents~~CLP’s assets was reflected in a good financial performance in 2006. Given that total earnings in 2005 included the tax consolidation benefit of HK$2,004 million from Australia, 2006 earnings showed a decrease of 13.3%. However, excluding the tax consolidation benefit of HK$2,004 million in 2005 and Hok Un redevelopment profit, the Group’s operating earnings increased by 7.7% to HK$9,856 million.

IThe amBoard ~~confident~~has ~~that~~recommended ~~CLP’s~~a ~~Management~~final ~~and~~dividend ~~staff~~for ~~have~~2006 ~~the~~of ~~skill~~HK$0.89 per share and ~~dedication~~a tospecial ~~carry~~final ~~through~~dividend ~~the~~of ~~challenging~~HK$0.02 ~~tasks~~ per share paid out of the ~~months~~profit ~~ahead.~~from IHok ~~look~~Un ~~forward~~redevelopment. toThese ~~reporting~~final todividends, ~~you~~together atwith the ~~end~~three ofinterim dividends paid during the year, onresult ~~the~~in ~~progress~~a ~~that~~total ~~your~~dividend ~~Company~~of ~~has~~HK$2.41 ~~made~~per share, as compared to HK$2.38 per share for 2005.

/The CEO’s /Review ~~The~~and ~~Hon~~the various sections of the Annual Report will more fully explain the details of the business and operating performance which lies behind the Group’s improved earnings. ~~Sir~~I ~~Michael~~am ~~Kadoorie~~pleased ~~The~~to ~~Hon~~see a meaningful earnings contribution from all of our main business streams, in Hong Kong and beyond. ~~Sir~~This ~~Michael~~provides ~~Kadoorie~~support for the decision that we took some years ago to diversify CLP’s activities beyond Hong Kong, 15so ~~August~~that ~~2006~~shareholders might benefit from a wider earnings base offering a measure of protection against market, regulatory or other risks in any single jurisdiction.

~~Page~~I 6believe that in 2006, CLP continued to meet its obligations to our stakeholders. We provided excellent service to our customers, we supplied power reliably to the communities we serve, we operated our assets responsibly and we delivered value to our shareholders. With your continuing support, the oversight of the Board and the commitment of its management and staff, CLP is determined to continue to meet those obligations throughout 2007 and beyond.

~~Table~~The ofHon. ~~Contents~~Sir Michael Kadoorie

~~Management’s~~BUSINESS ~~Discussion~~PERFORMANCE ~~and~~AND ~~Analysis~~OUTLOOK

~~The~~Electricity ~~Chairman’s~~Business ~~Statement~~in ~~which~~Hong ~~introduces~~Kong this Interim Report focuses on the major priorities ahead and the outlook for the CLP Group. In this Management’s Discussion and Analysis we explain the Group’s operational and financial performance over the first six months of 2006.

The performance of our Hong Kong electricity business in 2006 was ~~Business~~characterised ~~Overview~~by

~~CLP~~• ~~follows~~good aprogress ~~clear,~~on ~~consistent~~three ~~and~~major ~~focused~~strategic strategy to realise our vision of being a leading investor-operator in the Asia-Pacific electricity power sector. We aim continuously to enhance our Hong Kong electricity business and to develop a portfolio of electricity businesses in Australia, the Chinese mainland and other countries in Asia. An outline of our investments is set out below: issues

- establishing the terms of the post-2008 regulatory regime for Hong Kong’s electricity industry;

Investments		Equity Interest		Description
CLP Power Hong Kong Limited (CLP Power Hong Kong)(1)		100%		CLP Power Hong Kong owns and operates the transmission and distribution system, covering a supply area of approximately 1,000 sq. km and which includes: • 554 km of 400kV lines • 1,232 km of 132kV lines • 185 km of 33kV lines • 10,498 km of 11kV lines • 55,751 MVA transformers • 210 primary substations in operation • 12,495 secondary substations in operation

improving the environmental performance of the business, particularly emission levels from Castle Peak Power Station; and

~~Page~~- 7securing a long-term LNG supply for Black Point Power Station.

~~Table~~• ofstrong ~~Contents~~operating performance, notably in respect of

~~Castle Peak Power Company Limited (CAPCO)(1), 6,908 megawatts (MW) of installed generating capacity 40% CAPCO owns: Black Point Power Station (2,500MW) • Gas~~-~~fired~~ ~~power~~meeting station (with distillate as back-up) comprising eight combined-cycle turbines of 312.5MW each • Units 1 to 8 in operation, Unit 8 commenced operation in May 2006 Castle Peak Power Station (4,108MW) • One of the ~~world’s~~demand ~~largest~~for coal-fired power station complexes, comprising four units of 350MW each and another four units of 677MW each • Two of the 677MW units are capable of burning gas as backup fuel. All units can burn oil as a backup fuel Penny’s Bay Power Station (300MW) • Three diesel oil-fired units of 100MW eachelectricity;

~~Note~~- ~~(1):~~effective ~~CLP~~operation ~~Power Hong Kong operates CAPCO’s power stations and purchases its power from CAPCO and Guangdong Daya Bay Nuclear Power Station. These sources~~ of ~~power,~~generating ~~together with CLP’s right to use 50% of the capacity of Phase 1 of the Guangzhou Pumped Storage Power Station, amount to a total installed capacity of 8,888MW.~~assets;

~~Page~~- 8timely capital investment to meet customers’ needs; and

~~Table~~- ofeffective ~~Contents~~cost management.

~~Australia~~• reasonable growth in earnings.

Investments Gross/Equity MW	Equity Interest	Description
TRUenergy, Australia 4,126/4,126MW	100%	TRUenergy is an integrated generation and retail electricity and gas business in Victoria, South Australia, New South Wales and the Australian Capital Territory, comprising: • 1,480MW coal-fired Yallourn Power Station and mine in Victoria • 1,280MW gas-fired Torrens Island Power Station in South Australia • Ecogen long-term hedge agreement that allows TRUenergy to purchase up to 966MW gas-fired capacity • 400MW gas-fired Tallawarra project in New South Wales, currently under construction • Iona Gas Storage facility in Victoria • Various long-term gas supply contracts • 33.33% interest in the SEAGas pipeline between Victoria and South Australia • Over 1.1 million retail electricity and gas customer accounts, mainly in Victoria and South Australia
Roaring 40s Renewable Energy Pty Ltd (Roaring 40s), Australia 255/99MW(2)	50%	Roaring 40s is a 50:50 joint venture partnership with Hydro Tasmania. Roaring 40s currently owns: • 100% of the 65MW Woolnorth Bluff Point wind farm in Tasmania • 50% of the 66MW Cathedral Rocks wind farm in South Australia Other renewables projects under construction include: • 49% of the 49MW China Datang Shuangliao wind farm in Jilin Province , China • 100% of the 75MW Woolnorth Studland Bay wind farm in Tasmania

In 2006, our total electricity unit sales, including those to the Chinese mainland grew by 0.6% to 34,089 GWh. The causes of the modest growth in electricity unit sales in Hong Kong are explained in further detail in the breakdown of unit sales growth by sector set out below.

Note (2): The 99 equity MW attributed to CLP, through its 50% equity interest in Roaring 40s, takes into account that Roaring 40s holds varying equity interests in the generating assets included in the 255 gross MW.


Sector	2006		Sales Increase / (Decrease) over 2005		Average annual sales change over 2002-2006		Notes on 2006 performance
Sector	Number of customers	Electricity sales	Sales Increase / (Decrease) over 2005		Average annual sales change over 2002-2006		Notes on 2006 performance

	‘000	GWh	%		%
Residential	1,937	7,469	(0.7	)	2.0		Mainly due to slow growth in customer numbers, high energy conservation awareness and cooler summer weather

Commercial	183	11,957	4.6		2.9		Caused by the reclassification from the Infrastructure and Public Services sector of accounts previously under the Housing Authority and now transferred to The Link Real Estate Investment Trust (REIT), as well as growth in property management and non-Government office sectors

Infrastructure and Public Services	84	7,482	(2.8	)	2.6		Attributable to the reclassification of The Link REIT to the Commercial sector and lower consumption by Government as a result of energy conservation measures

Manufacturing	32	2,653	(3.0	)	(3.9	)	The Manufacturing sector continued to decline with a reduction in sales, particularly in the electronic, paper and textile sectors

Total Local Sales	2,236	29,561	0.6		1.9

Export Sales	—	4,528	0.7		23.4		Assisting Guangdong meeting its electricity demand and contributing to better regional air quality by reducing the use of more polluting diesel-powered generators. Easing tariff pressure for our Hong Kong customers – the resulting profits are allocated on a 80/20 basis between customers and shareholders

Total Sales	2,236	34,089	0.6		3.6

~~Page~~Local 9demand for the electricity supplied by our generating plant peaked at 6,435MW in July (although this was slightly lower than the historical peak of 6,475MW achieved the previous year). System demand reached an all time high of 8,318MW in July (exceeding the previous record of 7,817MW). Our reserve margin of generating capacity (the relationship between the total installed capacity available to serve our Hong Kong customers and the highest past demand for electricity from those customers) was around 38%. In July, when high local demand combined with strong demand from Guangdong, the system reserve margin was only 7%.

~~Table~~Under the Scheme of ~~Contents~~Control, all of the benefits achieved by CLP through cost control are passed directly to customers, in terms of lower tariffs. Our announcement, in December 2006, that CLP would continue its longstanding tariff freeze for the ninth successive year, is the clearest demonstration of our success in effective cost management. On 31 December 2007, a CLP customer will be paying the same price for electricity as he or she did on 1 March 1998.

~~Other~~Looking ~~Countries~~ahead, local electricity demand is expected to be driven by increasing business activities, such as in ~~Asia~~the financial services sector, and ongoing housing development. In the medium to long term, Government promotion of energy saving initiatives, both within Government itself and to the public as a whole, will play an important role in energy conservation. Taken with the continuing transfer of manufacturing capacity to the Mainland, electricity demand growth is forecast to be around 2-3% per annum. Economic development in Guangdong Province is expected to continue, accompanied by some shortages in electricity supply. However, as the supply and demand of electricity in Guangdong becomes more balanced we expect that sales to Guangdong will reduce over time.

Investments Gross/Equity MW	Equity Interest	Description
Gujarat Paguthan Energy Corporation Private Limited (GPEC), India 655/655MW	100%	GPEC owns and operates a 655MW gas-fired combined-cycle power station in Gujarat, India.
OneEnergy Limited (OneEnergy) 5,588/383MW(3)	50%	A 50:50 strategic joint venture with the Mitsubishi Corporation of Japan, which currently owns a 22.4% interest in Electricity Generating Public Company Limited (EGCO) in Thailand. EGCO owns and operates: • REGCO and KEGCO gas-fired combined-cycle power stations in Thailand (2,056MW) • 25% interest in the 1,070MW Nam Theun 2 hydro project in Laos, under construction • 50% interest in the 1,468MW Kaeng Khoi 2 CCGT project in Thailand, under construction • 368MW out of a total of 994MW in a portfolio of small power projects operating and under construction in Thailand and the Philippines
Ho-Ping Power Company (HPC), Taiwan 1,320/528MW	40%	HPC owns a 1,320MW coal-fired power station at Ho-Ping, Taiwan. Operation started in 2002 and is by a separate joint venture, with the same shareholdings as HPC, but with CLP management leadership.
BLCP Power Limited (BLCP), Thailand 1,434/717MW	50%	BLCP is the developer of a 1,434MW coal-fired power station now under construction at Map Ta Phut, Thailand. CLP is responsible for construction management and is the major shareholder in the operating company.

Whilst the economic and operating outlook going forward is positive, the political arena poses nearer term challenges to our business in the form of three major strategic issues, namely, the negotiations on the post-2008 electricity regulatory regime, environmental issues associated with emissions from Castle Peak and sourcing LNG for Black Point.

~~Note~~Our ~~(3):~~major ~~The~~plans ~~383~~and ~~equity~~activities MWfor ~~attributed~~2007 towill ~~CLP,~~include: ~~through its 50% equity interest in OneEnergy, takes into account that OneEnergy indirectly holds varying equity interests in the generating assets included in the 5,588 gross MW.~~

~~Page~~• 10completion of the SoC negotiations with Government;

~~Table~~• further progress on the Castle Peak emissions reduction project, including finalising the planning of ~~Contents~~the flue gas desulphurisation equipment and the plan for NOx reduction; and

~~Chinese~~• ~~Mainland~~for the LNG project, obtaining approval of the financial plan from the Executive Council of the HKSAR Government, commencing front-end engineering design work of the receiving terminal, as well as putting preliminary purchasing arrangements in place for LNG to be delivered when the terminal is ready for operation and making arrangements with the Yacheng field gas suppliers necessary to transition to LNG.

Investments Gross/Equity MW	Equity Interest	Description
Guangdong Nuclear Power Joint Venture Company, Limited (GNPJVC) 1,968/492MW	25%	GNPJVC was established in 1985 to construct and operate Guangdong Daya Bay Nuclear Power Station (GNPS) at Daya Bay . GNPS is equipped with two 984MW Pressurised Water Reactors for which the majority of the equipment was imported from France and the United Kingdom. 70% of electricity generated is supplied to Hong Kong, with the remaining 30% sold to Guangdong.
Hong Kong Pumped Storage Development Company, Limited (PSDC) 1,200/600MW	49%	PSDC has the right to use half of the 1,200MW pumped storage capacity of Phase 1 of the Guangzhou Pumped Storage Power Station until 2034.
CLP Guohua Power Company Limited (CLP Guohua) 2,100/630MW(4)	49%	CLP Guohua holds interests in three coal-fired power stations: • Beijing Yire Power Station in Beijing (400MW) • 50% interest in 1,000MW Panshan Power Station in Tianjin • 55% interest in 700MW Sanhe Power Station in Hebei
CLP Guohua Shenmu Power Company Limited (Shenmu) 200/98MW	49%	Shenmu Power Station, in Shaanxi , has two 100MW coal-fired units.
Guizhou CLP Power Company Limited (Guizhou CLP Power) 600/420MW	70%	Guizhou CLP Power owns and operates two 300MW coal-fired generating units which supply the Guizhou power grid and, indirectly, Guangdong Province .
Shandong Zhonghua Power Company, Ltd. (SZPC) 3,000/882MW	29.4%	SZPC owns four coal-fired power stations, Shiheng I and II (totalling 1,200MW), Liaocheng (1,200MW) and Heze II (600MW), in Shandong Province .
Huaiji Small Hydropower Stations (Huaiji) 98/74MW	75%	Eight small hydro power stations in Huaiji County , Guangdong Province are in operation, with one under construction, amounting to a total of 98MW. CLP’s equity interest in Huaiji was increased to 84.9% on 4 August 2006.

Energy Business in Australia

~~Page~~TRUenergy, 11CLP’s wholly-owned integrated energy business in Australia, has completed its first full year of operation since the acquisition of the TXU Merchant Energy Business (MEB) from Singapore Power in May 2005. During 2006, the major themes of our Australian activities were:

~~Table~~• completing the integration of ~~Contents~~the MEB with our existing Yallourn Power Station and with the CLP Group as a whole;

HNEEP-CLP Changdao Wind Power Co., Ltd. (Changdao Wind Power) 27/12MW	45%	Changdao wind farm, with a generating capacity of 27MW, started commercial operation in May 2006. It is connected to the Shandong provincial grid to serve Yantai City .
CLP Guangxi Fangchenggang Power Company Limited (Fangchenggang) 1,200/840MW	70%	Construction of a new power station with two 600MW coal-fired units at Fangchenggang , Guangxi is in progress. The first unit is scheduled for commissioning by third quarter of 2007.
HNNE-CLP Weihai Wind Power Company Limited (Weihai Wind Power) 20/9MW	45%	Weihai wind farm is located in Shandong Province and has an initial capacity of 20MW, with commissioning due in 2006/7. The power will serve local electricity needs.
Huaneng Shantou Wind Power Company Limited (Nanao II Wind Power) 45/11MW	25%	Nanao II wind power project of 45MW is located on Nanao Island off Shantou , Guangdong Province. The power generated from this wind farm, which is targeted for commissioning in 2007, will serve the local electricity needs of Shantou City.

•

continuing to compete in highly competitive retail markets;

~~Note~~• ~~(4):~~reviewing ~~The~~and ~~630~~enhancing ~~equity~~our MWrisk ~~attributed~~management topolicies ~~CLP,~~and ~~through its 49% equity interest in CLP Guohua, takes into account that CLP Guohua holds varying equity interests in the generating assets included in the 2,100 gross MW.~~procedures;

~~Page~~• 12effective asset management; and

~~Table~~• ofgenerating ~~Contents~~meaningful earnings contribution to the Group.

The integration of the MEB with Yallourn and the CLP Group was largely completed. Following a strategic review initiated ~~Operational~~in ~~Performance~~late 2005, a number of initiatives were implemented during 2006 to improve organisational effectiveness and reduce costs. These included centralisation of finance, human resources and information technology functions across the business and the formation of a strategic sourcing function.

~~Electricity~~As ~~Business~~an integrated business, TRUenergy has been successful in ~~Hong~~restructuring ~~Kong~~its bank debt facilities, achieving an approximate 30% reduction in interest margins and increased flexibility for funding future growth. TRUenergy maintained its A- (stable) rating from Standard & Poor’s.

The ~~Hong~~benefits ~~Kong economy maintained robust growth in the first quarter~~ of ~~2006,~~TRUenergy’s ~~supported~~integrated ~~by exports~~ and ~~local~~diverse ~~retail~~portfolio ~~sales. With services contributing a high portion~~ of ~~GDP, increased energy efficiency awareness of~~ electricity ~~consumers~~generating and ~~milder~~retail ~~weather~~assets ~~conditions~~were demonstrated in ~~the~~January ~~period,~~2006 ~~local~~when ~~sales of electricity rose only moderately by 0.8% in~~ the ~~first~~portfolio ~~half~~reduced ofrisks ~~the~~and ~~year,~~captured ~~over~~profit ~~the~~when ~~same~~severe bushfires ~~period~~threatened ingeneration ~~2005~~at Yallourn.

AnOur ~~analysis~~risk management and energy trading activities take account of broader market trends such as an increasing focus on sustainability and the ~~local~~environment, ~~sales~~including the mandatory renewable energy targets being set in 2006 by ~~sector~~the ~~during~~state governments of Victoria and New South Wales (NSW). CLP has an established position in renewable energy through our Roaring 40s joint venture with Hydro Tasmania, which already owns and operates wind farms at Woolnorth Bluff Point (Tasmania) and Cathedral Rocks (South Australia). During the ~~period~~year, Roaring 40s decided to halt development of two further wind farms, following the Federal Government’s decision not to increase the mandatory renewable energy target, which is ascrucial ~~follows:~~for new renewable energy projects to be economically viable. However, the move by state governments to mandate renewable energy targets and evidence of some rethinking by the Federal Government of its own policy in this area, suggest that these and other opportunities for renewable energy projects may open up in Australia during the months ahead.

	Increase/(Decrease) Over 1st Half of 2005	Percentage ofTotal Local Sales
Residential	(1.6)%	23.0%
Commercial	5.1%	41.6%
Infrastructure & Public Services	(2.7)%	25.8%
Manufacturing	(1.0)%	9.6%

With its interest in the full range of generation, from zero emissions (through our relationship with Roaring 40s) to brown coal, TRUenergy has been active in public and political discussion of environmental issues and the debate around carbon pricing, including through our input to the National Emissions Trading Taskforce.

~~Affected~~At byYallourn, the ~~weather~~instrument ~~conditions~~and incontrols ~~the~~upgrade ~~period~~continued ~~and~~with ~~public~~installation ~~awareness~~ of ~~energy conservation,~~ the ~~Residential Sector~~equipment ~~recorded~~completed aand ~~slight~~commissioning ~~drop in sales~~underway. ~~The~~Tuning ~~apparent~~improvements ~~strong~~have ~~growth~~been inmade ~~the Commercial Sector was due~~ to ~~the~~Units ~~improved~~3 ~~economy~~ and ~~reclassification~~4 ~~from~~and ~~the~~we ~~Infrastructure &~~are ~~Public~~seeing ~~Services~~the ~~(IPS)~~benefits ~~Sector~~ of ~~the~~improved ~~accounts~~control ~~previously under the~~of ~~Hong~~plant ~~Kong~~operations. ~~Housing~~Following ~~Authority~~an ~~and~~overhaul ~~now~~of ~~transferred~~Unit to4, ~~The~~improved ~~Link~~efficiency ~~Real~~was ~~Estate~~achieved ~~Investment~~by ~~Trust.~~replacing Insome ~~the~~low ~~IPS~~pressure ~~Sector,~~turbine ~~lower~~blades ~~consumption~~with ~~was~~an ~~recorded~~improved ~~for~~design, ~~Public~~improving ~~Services~~boiler ascombustion aby ~~result~~modifying offuel ~~Government’s~~flow ~~energy~~and ~~saving~~installing ~~programme.~~water ~~For~~cannons ~~the~~to ~~Manufacturing Sector,~~maintain ~~the~~heat ~~declining~~transfer ~~trend~~within ~~continued,~~the ~~but at a slower rate~~furnace.

~~Supply~~In toJanuary ~~Guangdong~~2007, ~~Power~~TRUenergy ~~Grid~~agreed ~~Corporation~~an ~~and~~asset ~~Shekou~~swap ~~remained~~of ~~relatively~~Torrens ~~stable~~Island ~~during~~generation ~~the~~asset ~~first~~with AGL Energy Limited (AGL). ~~half~~Subject ofto ~~2006~~obtaining the Australian Competition and Consumer Commission’s clearance and other third party consents, ~~compared~~TRUenergy will sell its Torrens Island Power Station to AGL and acquire the ~~same~~180MW ~~period~~gas-fired inHallett ~~2005~~Power Station from AGL. The asset ~~combined~~swap ~~sales~~is expected to ~~these~~be ~~two~~completed ~~large~~in ~~mainland~~July ~~customers~~2007. ~~dropped~~Combined ~~slightly~~with byour 1generation in Victoria, Hallett Power Station, which is a peaking generator, will strengthen the TRUenergy portfolio in meeting the supply needs of our existing customers more economically.~~4%.~~

~~Total~~In ~~unit~~2006, ~~sales~~we started construction of Tallawarra Power Station, ~~which~~ ~~include~~a ~~both~~new ~~local~~combined-cycle ~~sales~~gas-fired ~~and~~plant ~~sales~~in toNSW. ~~the~~This ~~Mainland,~~is ~~rose~~being constructed by Alstom 0under a turnkey Engineering, Procurement and Construction contract.5% ~~compared~~On tocompletion scheduled before the ~~corresponding~~end ~~half~~of 2008, Tallawarra will be Australia’s most efficient gas-~~year~~fired ingeneration ~~2005~~plant.

~~Towards~~Going ~~the end of 2005~~forward, ~~we announced~~TRUenergy ~~that~~will ~~CLP’s~~aim ~~tariffs~~ to: our Hong Kong customers would be frozen in 2006. There has been no tariff increase since 1998. Our customers continue to enjoy an average net tariff that remains the lowest in Hong Kong and amongst the lowest in metropolitan cities and open markets around the world.

In• ~~March,~~grow ~~CLP submitted~~ its ~~formal~~retail ~~response~~business to Government’s Stage II Consultation on the future of Hong Kong’s electricity industry. In our response (which is available on our website at www.clpgroup.com) we expressed our support for Government’s policy objectives of reliable, safe, efficient and environmentally responsible energy supplies, at reasonable prices. However, we also expressed our strong and justified reservations about Government’s proposals in four major areasby: ~~environmental disincentives, unclear plans to migrate to a competitive market, inadequate incentives to encourage investment, and an unreasonably short duration of the future regulatory regime.~~

~~Page~~- 13planning an organic entry strategy for the commencement of full retail contestability in Queensland on 1 July 2007;

~~Table~~- positioning for potential privatisation of ~~Contents~~NSW’s retail businesses;

In- ~~May~~further ~~2006,~~organic ~~Government~~growth issued an information paper summarising the views received during the Stage II Consultation. These included over 17,000 written submissions from different sectors of the community and over 700 messages through the discussion forums on Government’s website. Many submissions were in ~~line~~South ~~with~~Australia ~~our own views~~ and there was a general consensus that reliability and safety of supply was vital and should be the key consideration in the future development of the electricity market. There were many reservations about the implications of introducing new supply sources from the Chinese mainland, as well as concerns that the proposed rate of return to the power companies, in a range of 7% to 11%, might be too low to attract continued investment and might affect supply reliability. There were also suggestions to provide incentives to encourage investment in emissions reduction facilities. The need for a stable and long term regulatory regime, in order to promote timely and adequate investment, is an important consideration which CLP has firmly and consistently emphasised in its contribution to the public debate on the future of our industry. Victoria;

~~Investment~~• incomplete ~~Hong Kong’s electricity infrastructure is necessary, substantial and continuous. For example, in~~ the ~~first~~asset ~~half~~swap of ~~2006,~~Torrens inIsland ~~line~~Power ~~with~~Station the Financial Plan approved by Government, CLP incurred HK$1.8 billion of capital expenditure on its transmission and distribution networks, in order to enhance supply quality and reliability, as well as providing for the ~~demand~~Hallett ~~created~~Power byStation ~~residential~~with ~~and civil and social infrastructure development projects in our supply area.~~ AGL;

~~In his~~• ~~Chairman’s~~grow ~~Statement,~~our ~~Sir~~generation ~~Michael~~business ~~Kadoorie~~by ~~has~~continuing ~~highlighted~~construction ~~two major projects which CLP currently has in hand with a view to enhancing the operating and environmental performance~~ of ~~our generating capacity in Hong Kong –~~ the ~~Castle Peak~~Tallawarra ~~‘B’~~400MW ~~Power Station Emissions Reduction Project and the LNG receiving terminal.~~ plant;

In• ~~respect~~maximising of the ~~Castle~~value ~~Peak ‘B’ Power Station Emissions Reduction Project, we have received and are evaluating tenders for demolition and plant re-location works and have issued the tenders for the provision~~ of ~~flue~~our ~~gas~~assets ~~desulphurisation (FGD) equipment and Boiler Island equipment (mainly for nitrogen oxide removal).~~ through:

~~With~~- ~~regard~~strong tofocus ~~the~~on ~~LNG~~cost ~~receiving terminal~~reduction, ~~the~~efficiency ~~EIA~~gains ~~studies are scheduled for completion in August 2006. We have devoted substantial resources~~ and ~~efforts~~customer toservice engage the community regarding the importance of the timely provision of an LNG receiving terminal in meeting Hong Kong’s energy needs in an effective, reliable and clean way. Our activities have included briefings to legislators and district councillors, workshops with representatives of environmental groups, roundtable discussions with industry and academic experts, site visits by stakeholders to potential sites, and media briefings. Details of the project and our stakeholder engagement activities can be obtained through our project website at www.clpgroup.com/environment/lng or our telephone hotline at (852) 2678 8189. enhancements;

~~Everything~~- weaddressing ~~do in our Hong Kong electricity business must result in~~ the ~~delivery~~effects of ~~excellent service to our customers. Our commitment to quality customer service is reinforced by our performance pledges, which are published annually and cover all~~ the ~~key~~aging ~~aspects~~ of ~~our service to customers. Our efforts in this regard are recognised by both our customers and industry peers. We were encouraged by recent awards from~~ the ~~Hong~~Yallourn ~~Kong~~plant ~~Association for Customer Service Excellence in the category of “Contact Service Centre”~~ and ~~“Counter~~continuing ~~Service”~~to asimprove ~~well~~its ~~as receipt of the Hong Kong Management Association’s Award for Excellence in Training for our call centre in the category of “Outstanding New Trainer”.~~ availability;

~~Page~~- 14successfully managing the flexibility provided by a diverse range of generation, fuel and retail assets in the wholesale gas and electricity market; and

~~Table~~• offocusing ~~Contents~~on climate change and sustainability.

~~Energy~~Electricity Business in ~~Australia~~the Chinese Mainland

~~TRUenergy~~In ~~has~~2006, ~~undergone a programme of organisational realignment aiming at integrating~~ the ~~Yallourn and merchant energy business (MEB) in order to achieve greater operating synergies. This process has progressed well with a number of organisational changes to increase the~~ focus of ~~the~~CLP’s ~~business~~Mainland onactivities ~~maintaining~~was ~~retail~~upon: ~~revenues and achieving greater customer responsiveness.~~

~~During~~• ~~the first~~maintaining ~~half~~progress ofon ~~2006,~~our ~~CLP~~greenfield ~~reached~~project aat ~~settlement~~Fangchenggang, ~~with Singapore Power in relation to certain matters regarding the purchase of the MEB in 2005. This settlement was treated as a purchase price adjustment.~~ Guangxi;

In• ~~January~~excellence ~~2006, there was a fire~~ in ~~the~~station ~~coal~~management ~~conveyor at Yallourn Power Station which resulted in an outage for Units 1~~ and 2. The fire occurred during a time of high temperatures resulting in high electricity spot prices. Due to the efforts of Yallourn staff, the coal supply was restored within five days. At the same time, we were able to use the generation capacity available elsewhere in the TRUenergy portfolio to minimise the impact of the lost generation on our market position. This incident provided a clear illustration of the value of a portfolio of generating capacity in this market, as compared to reliance on a single asset. operation;

~~The~~• ~~development~~management of ~~the~~tariff ~~400MW~~issues combined-cycle gas-fired power station in Tallawarra in New South Wales (NSW) is proceeding well. The Tallawarra project will provide 400MW of gas-fired combined-cycle capacity to the TRUenergy portfolio. Consistent with TRUenergy’s strategy of integrating generation and ~~retail,~~coal this project will form a basis for the expansion of the retail business in NSW. The combined-cycle plant will use natural gas at high levels of energy efficiency and has a very low level environmental impact. costs;

~~The~~• ~~relevant~~extending ~~approvals~~our ~~have~~renewable ~~been~~energy ~~obtained~~activities; and the site is being prepared for construction. Notice to proceed was issued on the main engineering, procurement and construction contract in June 2006. The plant is scheduled to start operation in late 2008, in time for the summer peak in NSW.

~~Overall~~• ~~competition~~maintaining ina ~~the~~meaningful ~~retail~~earnings ~~energy~~contribution ~~market continues~~ to ~~be aggressive, particularly in~~ the ~~Victorian gas and electricity mass markets~~Group. Our marketing and sales initiatives have been successful in ensuring that our own customer churn (that is, the percentage of customers switching suppliers) is better than the average market rates and, we anticipate, will allow us to maintain our current market share. Competition in other regions is continuing to increase, albeit at substantially lower levels than the Victorian market. We do not expect these competitive pressures to diminish in the short term.

~~Electricity~~Construction ~~Investments~~of inthe two 600MW coal-fired supercritical units at Fangchenggang is progressing towards the ~~Chinese~~target ~~Mainland~~of commissioning the first unit by the third quarter of 2007. By the end of 2006, the consolidated project completion was 82.16%, which is consistent with this target. Preparations for the start of commercial operations are well underway and newly recruited station operators have been attending classroom and on-job training.

The ~~Guangdong~~successful ~~Daya Bay~~progress ~~Nuclear~~made ~~Power~~on ~~Station (GNPS), in which CLP holds a 25% stake, operated at a high capacity factor during~~ the ~~first~~Fangchenggang ~~half of the year~~project, ~~except~~growth ~~for~~in ~~the~~electricity ~~period~~demand ~~during~~and ~~which Unit 1 was shut down for~~ the ~~planned~~constructive ~~10th~~local ~~year~~relationships ~~refuelling~~we ~~outage.~~have ~~During the outage~~established, ~~comprehensive~~have ~~statutory~~encouraged ~~inspections~~CLP to ofconsider ~~safety-related~~an ~~equipment~~expansion ~~were~~at ~~made and the results were found satisfactory~~Fangchenggang. ~~GNPS~~We ~~has~~are ~~achieved~~promoting athe ~~good~~incorporation ~~safety~~of ~~record throughout~~ the ~~period~~Fangchenggang ~~under~~II ~~review.~~project ~~The station was awarded first places~~ in ~~Industrial Safety~~the ~~and~~Guangxi inAutonomous ~~Radiation~~Region’s ~~Protection~~five-year inplan. ~~the~~A ~~2005~~feasibility ~~Safety~~study ~~Challenge~~report ~~Competition,~~on ~~which~~Fangchenggang ~~included~~II ~~all~~has ~~the~~been ~~nuclear~~completed ~~power~~and ~~stations~~submitted ~~in France, sister plants~~ to the ~~GNPS~~Guangxi authorities.

~~Page~~Major 15events in plant operation in 2006 included:

~~Table~~• The successful retrofit of ~~Contents~~low NOx burners to Unit 2 at Yire Power Station in Beijing, which resulted in an appreciable reduction in NOx emissions;

~~Elsewhere,~~• ~~coal~~A ~~supply~~feasibility ~~and~~study ~~tariff~~for ~~management~~upgrading ~~continued to be~~ the ~~primary~~plant ~~focus~~capacity ofat ~~management~~Shenmu ~~attention~~by in10% ~~our~~was ~~joint ventures: SZPC~~completed, ~~CLP~~with ~~Guohua~~a ~~and~~view ~~Guizhou CLP Power. The coal supply situation has gradually improved and coal prices have started~~ to ~~stabilise,~~implementing ~~although~~these ~~they~~modifications ~~remain high. The coal supply to our joint ventures has been able to sustain generating requirements~~ during ~~the first six months of 2006, except for a short period early in the year when tight coal supply temporarily restricted generation at Anshun II Power Station in Guizhou.~~ 2007;

~~Generating~~• ~~companies~~The inreliability ~~the Mainland have been under financial pressure as a result~~ of ~~high coal prices. To alleviate this,~~ the ~~PRC~~Flue ~~authorities~~Gas ~~have~~Desulphurisation ~~announced~~(FGD) ~~the~~plant ~~second round~~at ofAnshun ~~coal~~II ~~price linked tariff adjustments in June 2006, following the first round implemented in May 2005.~~ improved;

~~Construction~~• ofDaya ~~the~~Bay ~~coal-fired Fangchenggang~~continued project in Guangxi is underway. The site has been formed and civil construction works are well advanced. The marine terminal for receiving coal deliveries is also under construction. Equipment for the 2 x 600MW generating units is being manufactured and components are being delivered to ~~site.~~operate Byefficiently ~~the end of June 2006 equipment supply~~ and ~~construction~~safely, ~~costs~~contributing ~~representing~~about 9029% of the total ~~projected~~electricity ~~contract~~supplied ~~values had been signed. The work remains on schedule~~ to ~~bring~~our ~~the~~Hong ~~first unit~~Kong ~~into~~electricity ~~operation~~business; ~~by third quarter of 2007.~~ and

~~Electricity~~• ~~Investments~~Construction inof ~~Other~~the ~~Countries~~FGD inplant ~~Asia~~for Shiheng Power Station.

InAll ~~March 2006 we announced~~ the ~~formation~~stations ofin awhich ~~50:50 strategic joint venture with Mitsubishi Corporation, called OneEnergy Limited. OneEnergy will draw on the combined expertise and capital of~~ CLP ~~and~~holds ~~Mitsubishi~~an tointerest ~~serve the region’s growing power needs. Mitsubishi’s local networks and relationships, as well as its experience in the independent power producer (IPP) business,~~ are ~~complementary~~subject to ~~CLP’s~~ ~~strong~~tariff ~~skills~~levels ~~and~~approved ~~experience~~by inthe ~~project~~authorities ~~development, execution, construction~~ and ~~operation~~implemented.

~~OneEnergy~~2006 ~~will~~was ~~operate~~a ingood ~~the Southeast Asia and~~year ~~Taiwan~~for ~~markets~~CLP’s ~~and~~renewable ~~will~~energy beactivities ~~the exclusive power sector investment vehicle~~ in ~~these markets for its two shareholders. The joint venture, which now holds~~ the ~~22.4% interest in EGCO in Thailand~~Mainland, ~~previously~~confirming ~~held~~our byview ~~CLP,~~that ~~aims~~it continues to ~~expand~~offer ~~elsewhere~~promising ~~in Southeast Asia as suitable~~ opportunities ~~arise.~~in ~~CLP~~wind and ~~Mitsubishi~~hydro ~~are~~power ~~also discussing the further injection into OneEnergy of their other assets in Southeast Asia and Taiwan~~projects.

~~Dialogue~~The progress made on CLP’s renewable projects in the Chinese mainland is ~~continuing~~such that, starting with ~~EGCO~~the ~~and~~stake ~~Electricity~~in ~~Generating~~the ~~Authority~~Huaiji ofhydro ~~Thailand~~power ~~(EGAT)~~joint ~~regarding~~venture ~~our~~project ~~position~~which we acquired in ~~EGCO~~1997, asCLP ~~well~~now ashas ~~EGCO’s~~an ~~role~~equity interest in ~~future~~174MW ~~expansion~~ of ~~generation~~wind ~~capacity~~farm, small to medium hydro power and biomass combined heat and power station in ~~Thailand~~the Mainland, with a further 500MW under active development. WeThe ~~are~~Jiangbian ~~also finalising~~project ~~discussions~~is ~~with~~an ~~EGCO~~important onstep in the ~~injection~~implementation of our ~~interest~~climate strategy inby increasing the ~~BLCP~~renewable ~~power~~component ~~project~~of ~~into~~our ~~EGCO~~portfolio.

~~Construction~~In ~~of the coal-fired BLCP power plant, in which CLP owns a 50% share, is on schedule for commercial operation of the first unit in October 2006 and the second unit in early~~ 2007~~. On completion~~, ~~this~~our ~~project~~focus will ~~make~~include: a substantial contribution to improving fuel diversity in the Thai electricity system. A separate joint venture, in which CLP owns 60%, is mobilised to take over operation and maintenance of the power plant upon commercial operation.

~~Page~~• 16commissioning of the first 600MW unit at Fangchenggang;

~~Table~~• completion of ~~Contents~~the Xinwan Hydro Power Station and wind power projects (Weihai I and II, Nanao, Shuangliao, Rongcheng) within schedule and budget;

At• ~~the~~construction ~~Ho-Ping~~of ~~power plant in Taiwan, in which CLP holds~~ a ~~40%~~biomass ~~interest,~~combined ~~repair~~heat ~~work~~and onpower ~~Unit~~station with 1, ~~which~~x ~~suffered~~75 atons/hour ~~turbine blade~~straw-fired ~~failure~~boiler inand ~~December~~6MW ~~2005,~~generator ~~was~~(equivalent ~~completed in May. The unit is operating on reduced output until late 2006, when new turbine blades will be installed~~ to ~~restore~~14MW ~~the~~electrical ~~full machine~~ capacity.) ~~Rebuild~~at ofBoxing ~~the~~County, first of the three coal storage domes destroyed during strong typhoons in 2004 and 2005 has commenced and will be completed in May 2007. Contracts for the remaining two coal domes are being finalised and construction works are scheduled for completion in late 2007 and mid 2008 respectively. Mitigation measures have been put in place and there is no significant impact on operation while the coal domes are being rebuilt. Shandong;

~~The Taiwan~~• ~~government~~completion ~~has announced a new round~~ of ~~solicitation for IPPs, with priority placed on coal-fired generation in northern Taiwan to be commissioned in 2011. The existing Ho-Ping power plant site within~~ the ~~Ho-Ping~~FGD ~~industrial~~upgrade ~~zone~~at ~~is strategically~~Anshun ~~located to serve such requirements. Work on developing the expansion plan and securing related environmental approvals is in progress.~~ II;

~~In India,~~• ~~GPEC~~obtaining ~~has~~National ~~continued~~Development ~~to operate at high levels of reliability~~ and ~~availability.~~Reform ~~There~~Commission ~~have~~approval ~~been~~for ~~no new disputes on billing with~~ the ~~off-taker~~Jiangbian ~~and~~hydro payments have been made on time and in full so far this year. Our major concern at GPEC is the availability of natural gas, since the supply from some of the existing contracts is expected to start to decline next year. GPEC can run on naphtha, as an alternative to gas, but this is much more costly. We are attempting to identify alternative sources of gas prior to the wider availability of LNG and natural gas from India’s east coast, which we expect to emerge some years in the future. In the circumstances, the development of GPEC II power station is on hold, and will be reactivated when the prospects of obtaining gas at a competitive price have become firmer. project;

~~Renewable~~• ~~Energy~~work on the expansion of the CLP/Guohua joint venture; and

~~During~~• ~~the~~establishing ~~opening~~a ~~months~~flagship ofoffice ~~2006 CLP has continued to move forward with its renewable energy activities,~~ in ~~line~~Beijing ~~with~~as ~~the~~a ~~commitment~~base ~~made~~for in our ~~2004~~Mainland ~~‘Manifesto~~development, ~~on Air~~construction ~~Quality~~ and ~~Climate~~operations ~~Change’ that energy from renewable sources should represent 5% of our total equity generating capacity by 2010~~teams.

~~The~~Electricity ~~27MW~~Business ~~wind farm~~ in ~~Changdao,~~India Shandong, in which CLP has a 45% share, commenced commercial operation on 1 May 2006. Erection of wind turbine generators has started at the 20MW wind farm in Weihai, Shandong. Negotiations are also in final stage on the wind turbine supply contract for the 45MW wind farm on Nanao Island.

InThe ~~August~~major ~~2006,~~focus ~~CLP~~of ~~has~~our ~~further~~business in ~~increased~~India ~~its stake~~ in ~~the~~2006 ~~Huaiji~~continued ~~project~~to ~~from~~be ~~75%~~ to ~~84.9%.~~: Comprising nine small hydro-electric power stations, Huaiji has a total generating capacity of 98.4MW. These environmentally friendly small hydro power stations together represent a substantial portion of the total generating capacity of Huaiji County.

In• ~~Hong~~optimise ~~Kong,~~the ~~wind~~performance ~~data~~of ~~collection~~our isexisting inassets ~~progress~~ at ~~two~~Gujarat ~~potential~~Paguthan ~~sites~~Energy ~~for~~Corporation aPrivate ~~wind~~Limited ~~pilot demonstration project. Other development work, including environmental studies, is in progress, with a view to construction and commissioning taking place in 2007.~~ (GPEC);

~~CLP~~• ispursue ~~collaborating~~opportunities ~~with~~for agrowth; UK wind farm developer, Wind Prospect, in evaluating a potential 150-180MW offshore wind farm in waters off Sai Kung in Hong Kong. The EIA commenced with the receipt of study brief from the Government in May 2006. Stakeholder engagement is in progress with various government departments, Sai Kung District Council, rural committees and ~~environmental groups.~~

~~Page~~• 17generate earnings growth.

~~Table~~The availability of ~~Contents~~gas from GPEC’s existing suppliers reduced unexpectedly during 2006, due to early depletion of the Lakshmi field from which most gas is sourced. Alternative arrangements for short-term supply were arranged. New long-term supplies are in discussion.

~~Our~~Gujarat ~~Roaring~~Urja ~~40s~~Vikas ~~joint~~Nigam ~~venture~~Ltd. ~~with~~(GUVNL) ~~Hydro~~is ~~Tasmania~~the issole ~~carrying~~off-taker ~~forward~~of the ~~construction~~electricity ofgenerated aat ~~75MW~~GPEC, ~~wind~~under ~~farm~~a at20-year ~~Woolnorth~~power ~~Studland~~purchase ~~Bay~~agreement in(PPA) ~~Tasmania~~which runs until December 2018. ~~Commissioning~~In is2006, ~~planned~~full ~~for~~settlements ~~early~~of ~~2007.~~sums ~~This~~due ~~facility~~under ~~will~~the ~~complement~~PPA ~~Roaring~~from ~~40s’~~GUVNL ~~existing~~were ~~portfolio~~made, ofwith ~~wind~~neither ~~power~~overdue ~~assets~~receivables innor ~~Australia.~~new Indisputed ~~April~~items ~~Roaring~~arising ~~40s~~over ~~signed~~this aperiod. ~~co-operation~~However, ~~agreement~~an ~~with~~order ~~Guohua~~passed ~~Energy~~by the ~~Investment~~Gujarat ~~Corporation.~~Electricity AtRegulatory ~~the~~Commission ~~end~~(GERC) ofin ~~May,~~August ~~this~~2006 ~~framework~~raised ~~led~~the possibility that incentives payable to ~~agreement~~GPEC could be paid on the ~~commercial~~basis ~~arrangements~~of ~~for~~actual adispatch ~~wind~~of ~~power~~electricity, ~~project~~rather ~~near~~than ~~Rongcheng~~station ~~City~~availability, as provided for in ~~Shandong~~the ~~Province~~PPA. ~~This~~The matter ~~wind~~is ~~farm,~~under discussion with anboth ~~operating~~GUVNL ~~capacity~~and GERC. A suitable clarification is being sought to restore the commercial entitlements of 48GPEC under the PPA.~~75MW~~ This illustrates an aspect of the ownership of GPEC, iswhich ~~scheduled~~has ~~for~~been ~~full~~apparent since CLP ~~commissioning~~acquired the station in ~~mid~~February 2002, namely the importance of ongoing engagement with the off-~~2007~~taker and the relevant regulatory authorities in order to ensure that GPEC’s rights under the PPA are properly implemented.

InDuring ~~light of the Australian Federal Government’s decision not to increase the Mandatory Renewable Energy Target~~2006, ~~which~~GPEC ~~is crucial~~Power ~~for~~Station ~~new~~continued ~~renewable energy projects~~ to beachieve ~~economically~~high ~~viable,~~reliability ~~Roaring~~and ~~40s~~extremely ~~has~~low ~~decided~~levels ~~to halt development~~ of ~~two~~forced ~~wind farms in Australia~~outages. ~~Discussions are proceeding with the Federal Government as well as State Governments about alternative means to encourage the development of renewable energy projects in Australia.~~

~~Human~~Although ~~Resources~~considerable efforts were made to pursue opportunities to grow CLP’s presence in the Indian power sector during 2006, we made less progress than we had hoped at the beginning of the year. In large measure, this reflected decisions not to pursue projects or investments whose risk/reward profile fell outside the parameters which CLP would regard as reasonable and, for those projects on which we bid, to maintain a disciplined and realistic approach to our bids, rather than to secure such projects or investments on a basis which, from the outset, would put shareholder value at unacceptable risk.

AsExpansion ~~at 30 June 2006, the Group employed 6,251 staff (2005: 5,672),~~ of ~~whom 3,862 (2005: 3,829) were employed in~~ the ~~electricity~~GPEC ~~business~~facility inoffers ~~Hong~~a ~~Kong~~natural ~~and~~opportunity ~~2,035~~for ~~(2005: 1,536)~~growth. ~~in energy businesses outside Hong Kong in Australia~~However, ~~the Chinese mainland and India. The increase was mainly~~ due to the ~~inclusion~~present ofnon-availability ~~employees in the Huaiji Project as a result~~ of ~~reclassification~~natural ofgas ~~Huaiji~~at ~~from~~affordable aprices, ~~jointly~~CLP ~~controlled~~has ~~entity to~~decided ato ~~subsidiary~~defer ~~of the Group after completion of~~ a ~~shareholding~~GPEC ~~restructuring~~II onproject ~~3 November~~until ~~2005. Total remuneration for~~ the ~~six~~longer ~~months~~term ~~ended~~development ~~30 June 2006 was HK$1,516 million (2005: HK$1,223 million),~~ of ~~which HK$901 million (2005: HK$866 million) was for~~ the ~~Scheme~~gas ofmarkets ~~Control~~becomes ~~business~~clearer. ~~Of the total remuneration, retirement benefit costs amounted to HK$123 million (2005: HK$100 million).~~

~~The~~Our ~~Annual~~plans ~~Group Management Development & Succession Planning (MDSP) review was held in March 2006 when the Group-wide MDSP status~~ and ~~key~~activities ~~strategic~~for ~~MDSP~~2007 ~~issues~~will ~~were reviewed by the Chief Executive Officer and senior management.~~include:

To• ~~strengthen~~continued ~~CLP’s~~successful ~~talent~~operation acquisition strategy, scholarships were granted to outstanding electrical engineering students in universities in Hong Kong. We have also exploited synergies between the Scholarship Programme, Internship Programme and ~~Engineering~~management ~~Graduate~~of ~~Trainee Programme to ensure that the most suitable young graduates are attracted and recruited as~~ our ~~Engineering~~GPEC Graduate Trainees. In addition to the Engineering Graduate Trainee Programme which aims at developing future engineering managers, CLP is also actively nurturing our future supply of skilled tradesmen through Apprenticeship Programmes. asset;

~~During~~• ~~the~~bidding ~~first~~for ~~half~~select oftransmission ~~2006 we have continued to strengthen region-wide human resources (HR) programmes as part of increasing Group synergy. For example:~~ opportunities;

• ~~The~~pursuing ~~Group-wide~~opportunities ~~MDSP~~to ~~process~~bid ~~was~~for ~~implemented~~generating incapacity, ~~TRUenergy.~~including ~~This~~the ~~enabled~~Ultra ~~senior~~Mega ~~management~~Power toprojects ~~quickly~~of ~~assess~~around ~~succession~~4,000MW ~~strength and identify new talent in the pipeline.~~each;

• ~~Plans~~bidding for aselect ~~regional~~hydro ~~development~~projects ~~programme~~and ~~for~~pursuing ~~Graduate~~the ~~Engineers~~acquisition ~~were~~of ~~finalised,~~a ~~and~~‘run of the ~~first~~river’ ~~two~~hydro ~~candidates~~project; ~~from Hong Kong were selected.~~and

• ~~The~~commissioning ~~international~~of ~~movement~~one large wind farm (in the order of ~~individual~~50MW, ~~staff~~through ~~between~~Roaring ~~subsidiaries~~40s) ~~has~~and ~~been~~starting ~~facilitated~~to build a meaningful portfolio of renewable energy assets in India.

•Electricity ~~Initial~~Business ~~design~~in ~~work~~Southeast ~~was~~Asia ~~completed on a regional HR information system that will enable us to access key HR data across the Group more easily~~ and ~~consistently.~~Taiwan

~~Page~~CLP’s 18objective has been to establish a regional power company which consolidates our existing investments in Thailand and Taiwan and brings in a regional partner to share the risks, rewards and capital investment required for growth. In line with this strategy, the major focus of our regional activities in 2006 has been:

~~Table~~• establishment of ~~Contents~~our regional joint venture, OneEnergy;

~~Safety~~• consolidation of existing investments;

~~There~~• ~~were~~management ~~no reported disabling injury incidents in our Hong Kong electricity business in the first six months~~ of ~~2006.~~existing The resulting disabling injury incidence rate (DIIR) of 0.00 compared favourably with the performance during 2005 (0.16). However, maintaining a good safety record demands constant vigilance and attention by all concerned. We are continuing with a series of five safety enhancement initiatives and other cultural improvement processes aimed at reinforcing our employees’ attitudes towards safety at work. These initiatives include: assets;

• ~~Safety~~pursuit ~~visits~~of byopportunities ~~directors~~for ~~and~~growth; ~~senior management~~and

• ~~Peer~~an ~~review~~improved byearnings ~~the~~contribution ~~managers~~to ofthe ~~other departments~~Group.

•Major ~~Safety~~progress ~~coaching~~was bymade ~~fellow~~towards ~~workers~~implementing ~~(Safety~~a ~~Leaders)~~regional business model through the formation of the regional joint venture OneEnergy, with Mitsubishi Corporation. This joint venture draws on our combined resources, experience, local connections, market positions and financial strengths in order to grow its business. During the course of the year, a management team comprising executives from both partners was put in place. Governance and control systems, staffing and offices were established. The joint venture is now fully operational, with the capacity both to oversee the management of its existing assets and to bid for further projects and assets.

•In ~~Predictive~~March ~~indicators~~2006 CLP completed the injection into OneEnergy of its 22.4% interest in Electricity Generating Public Company Limited (EGCO). We also reached agreement for ~~monitoring~~CLP ~~safety~~to ~~efforts~~sell ~~against~~its ~~performance~~50% stake in BLCP to EGCO in October 2006. The result of these transactions will be to make EGCO the exclusive vehicle for OneEnergy (and, therefore, CLP) in the Thailand power market.

•Arrangements ~~Safety~~are ~~Incentive~~also ~~Scheme~~being tofinalised ~~encourage~~for ~~participation~~the ~~from~~injection ~~all~~into ~~level~~OneEnergy of ~~staff~~CLP’s 40% interest in Ho-Ping. It is expected that this asset injection will be completed by the end of the first quarter of 2007. It is also envisaged that Mitsubishi Corporation’s 21% interest in the 1,200MW in Ilijan project in the Philippines will be injected into OneEnergy. However, the timing of that potential injection is uncertain, given the impending sale of Mirant Asia Pacific Limited, a joint venture partner with Mitsubishi Corporation in Ilijan, and the contractual pre-emption arrangements included in the Ilijan shareholders agreement.

~~There~~The ~~were~~performance noof ~~reported~~Ho-Ping ~~disabling~~was ~~injury~~affected ~~incidents~~by ~~for~~a ~~staff~~blade atfailure ~~GPEC,~~in ~~Ho-Ping,~~the ~~Torrens~~Unit ~~Island~~1 ~~and~~turbine ~~Iona~~in ~~Gas~~November ~~Storage~~2005. ~~during~~Substantial ~~the~~repair ~~first~~work ~~six~~was ~~months.~~required, ~~Two~~which led ~~reportable~~to ~~incidents~~an ~~took~~extended ~~place~~outage atuntil ~~Yallourn~~May ~~Power Station~~2006. ASince ~~DIIR~~then, ofthe ~~0.00~~unit ~~was~~has ~~maintained~~been ~~at GPEC,~~restored ~~Ho-Ping,~~to ~~Torrens~~service ~~Island~~with ~~and~~a ~~Iona~~slightly ~~during~~reduced ~~the~~output, ~~current~~and ~~year,~~is ~~whereas~~now ~~the~~operating ~~DIIR~~in ~~was~~full ~~2.04~~capacity ~~for~~after ~~Yallourn~~installation ~~due~~of tonew ~~two~~blades ~~incidents~~in February 2007. ~~Safety~~Discussions ~~enhancement~~with ~~initiatives~~insurers ~~were~~continue to ~~continued~~finalise atthe ~~all~~insurance ~~stations~~claims.

~~The~~Ho-Ping ~~CLP~~was ~~Group’s~~able ~~regular~~to ~~joint~~mitigate ~~venture~~most ~~Safety~~of the impact of high spot coal and ~~Health~~shipping ~~Synergy~~costs ~~Forum~~in ~~continued~~2006 due to ~~enhance~~a favourable adjustment in the ~~sharing~~energy ofcharge ~~experience~~rate under the PPA with Taipower, as well as the protection afforded by existing long-term coal supply and ~~knowledge~~shipping oncontracts. ~~safety~~The ~~issues~~rebuild ~~across~~of the ~~Group~~first of the three coal storage domes damaged during strong typhoons in 2004 and 2005 has been progressing well and will be completed in May 2007. The design and preparation work for the rebuild of the remaining two domes is underway, with ~~our~~completion ~~joint~~scheduled ~~venture~~for ~~partners~~late 2007 and 2008. Agreement has been reached on insurance and equipment warranty claims.

~~There~~Construction ~~was~~of athe ~~fatal~~1,434MW ~~accident~~coal-fired ~~involving~~project anat ~~employee~~BLCP has progressed ahead of aschedule ~~contractor~~and ~~working~~within atbudget. Pre-commercial ~~the~~operation ~~site~~started ofin mid August for the ~~BLCP~~first ~~Project~~717MW unit and in mid November for the second unit, around seven weeks and eleven weeks ahead of their respective full commercial operation dates of 1 October 2006 and 1 February ~~this~~2007 ~~year~~under the terms of the PPA. ABLCP ~~thorough~~reached ~~investigation~~an ~~has~~agreement ~~been~~with ~~undertaken~~the ~~and~~offtaker, the ~~necessary~~Electricity ~~measures~~Generating ~~have~~Authority ~~been~~of ~~taken~~Thailand, ~~with~~in respect of the ~~contractors~~early togeneration, ~~strengthen~~which ~~safety~~benefited ~~management~~both parties.

~~Environment~~The operating company for BLCP is Power Generation Services Company Limited (PGS), which is a separate 60/40 joint venture between CLP and Banpu (the shareholdings in BLCP, prior to the sale of our interest to EGCO, was 50/50 between CLP and Banpu). PGS has been recruiting and training its staff, and putting in place the necessary operating systems, during the course of construction. It has taken over responsibility for operation and maintenance of the first unit and the second unit in October 2006 and February 2007 respectively.

CLP’s ~~environmental~~regional ~~performance~~development isefforts ~~overseen~~are bynow ~~the~~carried ~~Social,~~out ~~Environmental &~~through ~~Ethics~~OneEnergy ~~(SEE)~~and ~~Committee~~our ~~of the Board of Directors, which was established~~ in-country ~~October~~partnership ~~2005. The SEE Committee met in February 2006 to review the Social~~ and ~~Environmental Report (SER) 2005 prior to its publication in March~~ vehicles. In ~~response to stakeholder feedback~~2007, weCLP’s ~~shortened~~objectives ~~our~~will ~~report~~be ~~from 48 pages in SER 2004~~ to: ~~28 pages in SER 2005. Stakeholders have responded favourably to the shorter, more focused report.~~

~~The~~• ~~2005~~complete ~~SER~~the ~~focused~~injection onof ~~four major environmental issues for~~ CLP and ~~our~~Mitsubishi’s ~~stakeholders:~~regional ~~air~~assets ~~quality,~~into ~~climate change, renewable energy and energy efficiency and conservation.~~ OneEnergy;

~~Air~~• ~~Quality~~ take forward our business in the region through OneEnergy as well as through existing and new partnerships at country and project levels;

~~CLP~~• isconsider ~~committed~~strategic toacquisitions ~~do our share to reduce emissions from Hong Kong sources. The construction of an LNG receiving terminal~~ in ~~Hong~~the ~~Kong,~~Philippines and ~~a retrofit of our coal plant at Castle Peak with FGD and other controls (see pages 4~~Singapore, 5as ~~and~~the ~~14)~~deregulated ~~are~~nature ~~examples~~ of ~~the~~those ~~major~~markets ~~investments~~may ~~that~~require wea ~~are~~critical ~~preparing~~mass to ~~make in order to meet this commitment.~~ compete;

~~The~~• ~~use~~pursue ofgreenfield ~~ultra-low~~development ~~sulphur~~opportunities ~~coal~~in Thailand, ~~branded as “Envirocoal”~~Taiwan, ~~has~~Indonesia ~~contributed~~and toVietnam aand, ~~significant~~in ~~reduction~~particular, ofsubmit ~~sulphur~~a ~~dioxide.~~competitive Webid ~~continue~~ to ~~procure~~the ~~low~~Taiwanese ~~sulphur coal~~authorities for the ~~Castle~~expansion ~~Peak~~of ~~Power Station and are seeking further opportunities with our committed coal suppliers to provide lower sulphur coal where possible.~~ Ho-Ping;

~~Page~~• 19continue relationship building in Vietnam with market participants and explore opportunities to participate in currently approved projects; and

~~Table~~• complete the rebuild of ~~Contents~~two of the three damaged Ho-Ping coal domes and replace the turbine blades on Unit 1, thereby restoring its full load capability.

~~Climate~~Safety ~~Change and Renewable Energy~~

InSafety ~~the~~has ~~2005~~long ~~SER~~been an utmost priority at CLP. However, 2006 was the most difficult year we ~~published~~have faced in many years, with fatal accidents involving contractors’ staff in Australia, China and Thailand. An employee of one of our ~~climate~~contractors ~~strategy~~was ~~statement~~fatally toinjured while working at the ~~public~~open ~~for~~cut mine of the ~~first~~Yallourn ~~time~~Power Station, Australia. ~~Our~~Two ~~strategy~~construction ~~relies~~workers employed by subcontractors were fatally injured in separate incidents at the Fangchenggang site; and fatalities occurred to two contractor workers on the FGD upgrade construction site at Anshun II, both in the Chinese mainland. A contractor employee was fatally injured from a ~~high~~fall ~~level~~from ofheight ~~transparency~~during construction at BLCP, Thailand. In addition to the specific follow-up actions we are taking at the sites in ~~managing~~question, ~~and~~we ~~reporting~~will carry out a third party expert review on safety management across our ~~greenhouse~~businesses ~~gas~~to ~~emissions~~determine further improvement measures to be taken.

In ~~addition~~2006, ~~to publishing~~ our ~~greenhouse~~overall ~~emissions~~safety inand ~~the~~health ~~2005~~performance ~~SER,~~has ~~CLP~~been ~~submitted~~satisfactory ~~its~~among ~~response~~employees. toWe ~~the~~were ~~Carbon~~able ~~Disclosure~~to ~~Project~~achieve 4a ~~(CDP4)~~reduction in ~~June~~Disabling ~~2006.~~Injury ~~CLP~~Incidence isRate ~~the~~(DIIR) ~~only Hong Kong-based company that has participated~~ in ~~CDP since its inception. This year’s response featured~~ our ~~new~~Hong ~~climate~~Kong ~~strategy,~~electricity ~~an overview of the~~ business ~~impact of existing~~ and ~~possible future climate~~ Ho-~~related regulations~~Ping, ~~our communications with stakeholders about the risks~~ and ~~opportunities~~maintained ~~from~~a ~~greenhouse~~zero ~~gas~~DIIR ~~emissions~~for ~~and~~GPEC ~~climate change,~~ and ~~total expenditures for fossil fuels~~BLCP. ~~Our~~The ~~full~~DIIR ~~response~~of isTRUenergy ~~available~~was on0.56 ~~our~~in ~~Group~~2006 ~~website,~~as ~~and~~compared ~~will~~to ~~also~~zero bein ~~available through the CDP website~~2005.

~~CLP’s~~In ~~climate~~Hong ~~strategy~~Kong, ~~also~~we ~~includes~~hold ~~the~~regular Safety, ~~target~~Health, toEnvironment ~~increase~~and ~~the~~Quality ~~capacity~~(SHEQ) forums for ~~renewable energy in~~ our ~~portfolio~~major tocontractors, 5%at bywhich ~~2010.~~the InSHEQ ~~2005,~~performance weCLP ~~increased our~~expects ~~share~~of ~~from~~them ~~less~~is ~~than 0~~communicated.5% toIn ~~1.4% and~~2006, aswe atorganised ~~30 June~~two ~~2006,~~such ~~this~~forums ~~represented~~which ~~1.7%.~~were ~~The~~well ~~status~~attended ofby our ~~renewable~~major ~~energy~~contractor ~~portfolio~~companies. Additionally, ~~and~~we ~~the~~opened ~~steps~~a weContractor ~~are~~Safety ~~taking~~Resource toCentre ~~continue~~in November 2006 to ~~expand~~provide ~~our~~safety ~~activities~~knowledge inand ~~this~~support ~~area~~services ~~are~~to ~~explained~~our oncontractors, ~~pages~~helping 17them ~~and~~to 18achieve ~~of this~~our ~~Interim~~SHEQ ~~Report~~requirements.

~~Energy~~Outside ~~Efficiency~~Hong Kong, we have introduced measures at construction sites to increase the safety awareness of our employees as well as contractors’ employees through training, supervision and ~~Conservation~~risk assessment. We have also involved staff across the CLP Group to participate in investigations and contribute their experience. We shall be engaging external experts to review our operational and construction activities and help us determine further effective ways to bring our safety message down to the workplace.

~~CLP~~Human ~~has~~Resources ~~a long-standing commitment to energy efficiency and conservation.~~

InOn ~~February~~31 December 2006, wethe ~~commissioned~~Group ~~our~~employed ~~first~~6,087 ~~green~~staff ~~distribution~~(2005: ~~substation~~6,059), atof ~~the~~whom ~~Royal~~4,129 were employed in the Hong Kong ~~Yacht~~electricity ~~Club~~and related business, 1,879 by our businesses in ~~Sai~~Australia, ~~Kung~~India, Chinese mainland, Southeast Asia and Taiwan, as well as 79 by CLP Holdings. ~~This~~Total ~~substation~~remuneration isfor ~~equipped~~the ~~with~~year aended ~~vegetable~~31 December ~~oil~~2006 ~~transformer~~was HK$3,063 ~~nitrogen~~million ~~gas~~(2005: ~~insulated~~HK$2,622 ~~switchgear~~million), including retirement benefits costs of HK$269 million (2005: HK$219 million). The increase in total ~~oil-free~~remuneration ~~cables~~was ~~and~~due to a ~~cadmium-free~~relative ~~battery.~~change Wein ~~will~~the benumber ~~introducing~~of ~~these~~employees ~~features~~in ~~into~~the ~~other~~Chinese ~~new~~mainland ~~substations~~and ~~when~~Australia, ~~appropriate~~where the total remuneration costs are different.

InEnvironment June 2006, CLP launched a series of “Go Greening” initiatives, including a pledge to plant 30,000 trees over the next three years in Tai Lam Country Park in Fu Tei, Tuen Mun. In addition, trees and scrubs will be planted on the rooftop of a CLP substation facility in Lai Chi Kok to create a “Sky Woodland” both to enhance the visual amenity of the substation and help conserve energy.

In ~~Hong Kong~~2006, ~~through~~ ~~our~~CLP ~~longstanding~~continued ~~“Powerwise” programme, together with community events, seminars and advisory support, we continue~~ to ~~promote~~focus ~~energy efficiency and conservation to the public. A particularly successful initiative was our collaboration with non-governmental organisations~~ on the ~~safe~~responsible ~~and~~management ~~smart use~~ of ~~energy to support achieving a greener and cleaner indoor environment at homes for~~ the ~~elderly.~~challenges Inwe ~~July,~~face ~~CLP~~in ~~joined~~ensuring ~~the~~that ~~“Energy Conservation Charter 2006 –~~our ~~Suitable~~environmental ~~Room~~performance ~~Temperature”~~meets ~~organised~~our byown ~~Hong~~expectations ~~Kong Government’s Environmental Protection Department with a pledge to save energy in the working environment~~ and ~~adhere~~those ~~to the principle~~ of ~~“Use~~our ~~if Required, Save if Possible”~~stakeholders.

~~Conservation~~The ~~applies~~key toenvironmental ~~water~~issues asthat ~~well~~we astackled ~~energy.~~during Wethe ~~have~~year awere: ~~successful track record of water conservation projects at our facilities. Our most recent water~~air ~~conservation~~quality ~~project was launched by TRUenergy~~ in ~~April~~Hong ~~2006. The A$300~~Kong,~~000~~ ~~upgrade~~global toclimate ~~the~~change ~~onsite~~and ~~water treatment facilities at~~ the ~~Torrens~~building ~~Island Power Station in South Australia will reduce wastewater discharge by 90% after completion~~ of ~~the project.~~a ~~The~~renewable ~~upgrade~~energy ~~will deliver significant environmental and operating improvements and will also improve the power station’s reliability in times of peak demand~~business.

~~Page~~For 20the first time this year, our Social and Environmental Report will be supplemented by a more detailed and comprehensive web-based sustainability report. These reports, together with our Annual Report, offer our shareholders and all stakeholders the opportunity to review our progress in 2006, as well as our setbacks, and our plans for the continuing effective and responsible management of all aspects of our business.

~~Table~~FINANCIAL ~~of Contents~~PERFORMANCE

~~Shareholder~~The ~~Value~~CLP Group’s operating earnings for 2006 were HK$9,856 million, a 7.7 % increase on our results for the previous year. Total earnings, including Hok Un redevelopment profit, amounted to HK$9,900 million and were 13.3% below 2005 earnings, which included a tax consolidation benefit of HK$2,004 million from the Australian business.

~~During~~The ~~the~~earnings ~~first~~from ~~half~~our ofHong ~~2006,~~Kong ~~CLP’s~~electricity ~~share~~business ~~price~~continued ~~and~~to represent the ~~Hang~~largest ~~Seng~~part ~~Index~~of ~~(HSI)~~the ~~rose~~Group’s bytotal ~~1.00%~~earnings, ~~and~~making ~~9.35%~~a ~~respectively,~~contribution ~~while~~of ~~the~~HK$7,290 million ~~Hang~~in ~~Seng~~2006, ~~Utilities~~compared ~~Index~~to ~~(HSUI)~~HK$7,047 ~~declined~~million byin 12005.~~10%.~~

~~The~~Operating ~~final~~earnings ~~dividends~~from ~~for~~our ~~2005,~~energy ~~comprising~~businesses ~~HK$0.83~~outside ~~per~~Hong ~~share~~Kong byrecorded ~~way~~an ofencouraging ~~ordinary dividend and HK$0.11 per share as special dividend~~increase, ~~were paid to shareholders on~~ ~~26 April~~contributing ~~2006.~~a ~~The~~total ~~first interim dividend for 2006~~ of HK$~~0.50~~2,894 ~~per~~million ~~share~~to ~~was~~Group ~~paid~~total onearnings, ~~15 June~~up ~~2006~~from ~~and the second interim dividend of~~ HK$~~0.50~~2,131 ~~per~~million ~~share~~in ~~will~~the beprevious ~~paid on 15 September 2006~~year.

~~Page~~Included 21in operating earnings is a total one-off gain of HK$408 million. Upon the formation in March 2006 of OneEnergy Limited, a strategic joint-venture in partner with Mitsubishi Corporation of Japan, a one-off gain of HK$343 million was realised. In December 2006, our interest in BLCP Power Limited was transferred to Electricity Generating Public Company Limited, Thailand and another one-off gain of HK$888 million was recorded. An impairment of HK$823 million (after tax) was provided for our investment in Yallourn Power Station of Australia as a result of lower electricity pool price forecast and reductions in performance of its ageing plant.

~~Table~~Operating earnings per share of HK$4.09 ~~Contents~~(2005: HK$3.80) increased by 7.7%, whilst total earnings per share decreased by 13.3% to HK$4.11 per share from HK$4.74 per share in 2005 which included a tax consolidation benefit in Australia.

The financial information set out in this announcement does not constitute the Group’s statutory financial ~~Financial~~statements ~~Performance~~for the year ended 31 December 2006, but represents an extract from those financial statements. The financial information has been reviewed by the Audit Committee and agreed by the Group’s external auditor, PricewaterhouseCoopers, to the amounts set out in the Group’s audited consolidated financial statements for the year.

~~The~~Consolidated ~~condensed~~Income ~~consolidated~~Statement interim accounts for the six months ended 30 June 2006 are unaudited but have been reviewed by the Audit Committee and our external Auditors. The Accounting policies adopted in the preparation of this interim result are consistent with those set out in the 2005 Annual Report, except the Group has adopted the new Hong Kong Financial Reporting Standards (HKFRS) Interpretation 4 “Determining whether an Arrangement contains a Lease”. The adoption of this Interpretation has resulted in certain power purchase arrangements being treated as leases for accounting purposes. The financial impact of adopting this Interpretation is disclosed under Note 2 to the accounts.

~~Consolidated~~for ~~Financial~~the ~~Results~~ year ended 31 December 2006

Revenue



		2006		2005
	Note	HK$M		HK$M
				(Restated)
Revenue	6	45,702		38,491
		-------------		-------------

Expenses
Purchases of electricity, gas and distribution services		(13,924	)	(9,880	)
Operating lease and lease service payments	7	(7,176	)	(7,063	)
Staff expenses		(1,812	)	(1,505	)
Fuel and other operating costs		(5,710	)	(4,098	)
Depreciation and amortisation		(4,968	)	(4,359	)

		(33,590	)	(26,905	)
		-------------		-------------
Other income, net	8	55		—
		-------------		-------------

Operating profit	9	12,167		11,586
Finance costs	10	(4,762	)	(4,445	)
Finance income	10	138		124
Share of results, net of income tax jointly controlled entities		2,936		3,182
associated companies		114		127

Profit before income tax		10,593		10,574
		-------------		-------------
Income tax (expense)/credit	11
current and deferred, excluding tax consolidation benefit		(683	)	(1,159	)
deferred: tax consolidation benefit from Australia		—		2,004

		(683	)	845
		-------------		-------------

Profit for the year		9,910		11,419
(Profit)/loss attributable to minority interest		(10	)	1

Earnings attributable to shareholders	12	9,900		11,420


Dividends	13
Interim dividends paid
Ordinary		3,612		3,468
Final dividends proposed
Ordinary		2,144		1,999
Special		48		265

		5,804		5,732


Earnings per share, basic and diluted	14	HK$ 4.11		HK$ 4.74

~~During~~Consolidated ~~the~~Balance ~~six-month~~Sheet ~~period to 30 June 2006, there was a 30.9% increase in revenue to HK$21,412 million (2005: HK$16,361 million).~~

Revenue from our business in Hong Kong recorded a 2.6% growth to HK$14,061 million (2005: HK$13,704 million). The increase was mainly due to higher unit sales and increased fuel clause revenue. The transfer from the Development Fund, which is an adjustment under the SoC, has now been reclassified as ~~revenue,~~at ~~which~~31 December ~~amounted~~2006 ~~to HK$488 million (2005: HK$338 million).~~

Revenue from our energy businesses outside Hong Kong amounted to HK$7,351 million (2005: HK$2,657 million), with the increase mainly from Australia of HK$6,502 million (2005: HK$1,968 million) as a result of the incorporation of the MEB’s full six months’ revenue as compared to the one month post-acquisition period in 2005. It should be noted that about 38% of the revenues from the retail sales of electricity and gas in Australia have to be paid as network charges to third party network operators.



			2006		2005
	Note		HK$M		HK$M
					(Restated)
Non-current assets
Fixed assets	15	(A)	83,418		79,509
Leasehold land and land use rights	15	(B)	2,235		2,233
Goodwill and other intangible assets	16		7,326		6,930
Interests in jointly controlled entities			19,173		16,719
Interests in associated companies			8		1,798
Finance lease receivables			2,740		2,806
Deferred tax assets			3,305		2,537
Derivative financial instruments			425		260
Other non-current assets			145		506

			118,775		113,298

Current assets
Inventories – stores and fuel			647		596
Trade and other receivables	17		8,799		6,759
Finance lease receivables			126		127
Derivative financial instruments			1,131		1,302
Bank balances, cash and other liquid funds			1,613		2,041

			12,316		10,825
			---------		----------
Current liabilities
Customers’ deposits			(3,417	)	(3,308	)
Trade and other payables	18		(5,893	)	(6,079	)
Income tax payable			(186	)	(391	)
Bank loans and other borrowings	19		(4,264	)	(3,508	)
Obligations under finance leases	20		(1,945	)	(1,803	)
Derivative financial instruments			(1,285	)	(1,134	)

			(16,990	)	(16,223	)
			---------		----------

Net current liabilities			(4,674	)	(5,398	)

Total assets less current liabilities			114,101		107,900

Financed by:
Equity
Share capital			12,041		12,041
Share premium			1,164		1,164
Reserves	21
Proposed dividends			2,192		2,264
Others			40,441		35,160

Shareholders’ funds			55,838		50,629
Minority interest			78		111

			55,916		50,740
			---------		----------
Non-current liabilities
Bank loans and other borrowings	19		26,014		25,883
Obligations under finance leases	20		20,865		19,694
Deferred tax liabilities			6,054		5,718
Derivative financial instruments			735		444
Fuel clause account			294		323
Scheme of Control (SoC) reserve accounts	22		3,346		4,174
Other non-current liabilities			877		924

			58,185		57,160
			---------		----------

Equity and non-current liabilities			114,101		107,900

~~Group~~Notes: ~~Earnings~~

~~CLP Group’s total operating earnings for the first half of 2006 were HK$4,936 million, which was HK$499 million higher than the corresponding period last year, representing an increase of 11~~1.~~2%.~~ ~~Included~~General in the total operating earnings is a one-off item relating to a gain of HK$291 million on the formation of OneEnergy. The total earnings, which include Hok Un redevelopment profit, increased by 7.9% to HK$4,975 million, as compared to the corresponding period in 2005. Information

~~Our~~The Company, CLP Holdings ~~electricity~~Limited, ~~business~~and inits ~~Hong~~subsidiaries ~~Kong~~are ~~continues~~collectively referred to ~~provide~~as ~~mild~~the ~~but~~Group ~~stable~~in ~~earnings~~this ~~growth,~~financial ~~with~~information. ~~earnings~~The ~~increasing~~Company byis ~~1.8%~~a tolimited ~~HK$3,573~~liability ~~million~~company incorporated and listed in Hong Kong. ~~This~~The ~~resulted~~principal ~~from~~activity ~~ongoing~~of ~~investments~~the inCompany ~~fixed~~is ~~assets~~investment toholding whilst ~~meet~~the ~~new~~principal ~~customer~~activities ~~demands~~of the subsidiaries are the generation and tosupply ~~improve~~of ~~quality~~ electricity in Hong Kong, Australia and India, and investment holding of ~~services~~power projects in the Chinese mainland, Southeast Asia and Taiwan.

~~Earnings~~The ~~from~~financial ~~investments~~operations inof ~~GNPJVC~~the ~~and~~Company’s ~~PSDC~~major ~~decreased~~subsidiary, byCLP ~~HK$84~~Power ~~million~~Hong toKong ~~HK$347~~Limited ~~million.~~(CLP ~~This~~Power ~~was~~Hong ~~due~~Kong), toand ~~Daya~~its ~~Bay~~jointly ~~Unit~~controlled 1entity, Castle ~~planned~~Peak ~~outage~~Power ~~for 10-year~~Company ~~refuelling~~Limited in(CAPCO), ~~the~~are ~~current~~governed ~~period.~~by ~~Earnings~~a ~~from~~Scheme ~~other~~of ~~investments~~Control in(SoC) Agreement entered into with the ~~Chinese~~Hong ~~mainland~~Kong ~~were~~Government. ~~slightly~~Our ~~increased~~electricity asbusiness ain ~~result~~Hong ofKong ~~improved~~is ~~contribution~~therefore ~~from~~also ~~Shandong~~referred to as the SoC business.

~~Our~~The ~~energy~~current ~~businesses~~SoC inAgreement ~~Australia~~will ~~recorded~~expire ~~earnings~~on of30 September ~~HK$287~~2008. ~~million~~The asHong ~~compared~~Kong toGovernment ~~losses~~is ofin ~~HK$8~~discussion ~~million~~with inCLP ~~2005,~~Power asHong aKong ~~result~~and ofCAPCO aregarding the ~~full~~post-2008 ~~six~~regulatory ~~months’~~framework. ~~contribution~~The ~~from~~final ~~the~~post-2008 ~~MEB~~regulatory asframework ~~compared~~will be subject to ~~only~~negotiation ~~one~~and ~~month~~agreement ~~in 2005~~between CLP Power Hong Kong, CAPCO and the ~~synergy~~Government. ~~gain~~The ~~from~~Group considers that, under the ~~progressive~~post-2008 ~~integration~~framework, ofthere ~~Yallourn~~will ~~Energy~~not be any impairment to the fixed and other assets employed for the ~~MEB~~Hong Kong electricity business.

~~Page~~These 22financial statements have been approved for issue by the Board of Directors on 28 February 2007.

~~Table~~The figures in respect of ~~Contents~~the announcement of the Group’s results for the year ended 31 December 2006 have been agreed by the Group’s auditor, PricewaterhouseCoopers, to the amounts set out in the Group’s audited consolidated financial statements for the year. The work performed by PricewaterhouseCoopers in this respect did not constitute an assurance engagement in accordance with Hong Kong Standards on Auditing, Hong Kong Standards on Review Engagements or Hong Kong Standards on Assurance Engagements issued by the Hong Kong Institute of Certified Public Accountants and consequently no assurance has been expressed by PricewaterhouseCoopers on the announcement.

~~Smooth~~2. ~~operation~~Basis ~~and improved collection~~ of ~~payments from the electricity off-taker increased the earnings from GPEC, India by HK$92 million to HK$371 million.~~ Preparation

The ~~decrease~~financial instatements ~~earnings~~have been ~~from~~prepared ~~power~~in ~~projects~~accordance inwith ~~Southeast~~Hong ~~Asia~~Kong ~~and~~Financial ~~Taiwan~~Reporting isStandards ~~due~~(HKFRS) toissued aby ~~lower~~the ~~earnings contribution~~Hong ~~from~~Kong ~~Ho-Ping~~Institute of ~~Taiwan,~~Certified ~~which~~Public ~~was~~Accountants ~~substantially~~(HKICPA). ~~reduced~~They ashave abeen ~~result~~prepared ofunder the ~~prolonged~~historical ~~outage~~cost ofconvention, ~~one~~as ofmodified by the ~~units~~revaluation of ~~caused~~certain byfinancial ~~turbine~~assets ~~blade~~and ~~damage~~financial ~~that~~liabilities ~~occurred~~(including inderivative ~~December~~financial ~~2005.~~instruments) ~~The~~which ~~repaired~~are ~~unit~~stated ~~resumed~~at ~~operation~~fair ~~in May 2006~~value.

In March 2006, CLP and Mitsubishi Corporation of Japan formed a strategic joint venture, called OneEnergy, to combine their respective expertise and capital to serve the power needs in Southeast Asia and Taiwan3. ~~The~~Changes ~~Group’s interest of 22.4%~~ in ~~EGCO~~Accounting ~~Thailand has been injected into OneEnergy. One-off profits arising from the formation of OneEnergy amounted to HK$291 million.~~ Policies

~~Unallocated~~The ~~finance~~Group ~~costs~~has adopted ~~incurred~~HKFRS-Int in4 ~~the~~“Determining ~~current~~whether ~~period~~an ~~increased~~Arrangement bycontains ~~HK$79~~a ~~million~~Lease”, towhich ~~HK$122~~prescribes ~~million~~that asthe determination of whether an arrangement is or contains a ~~result~~lease shall be based on the substance of ~~borrowings~~the toarrangement. ~~fund~~It requires an assessment of whether the ~~new~~fulfilment ~~investments~~of the arrangement is dependent on the use of specific assets and the ~~Group~~arrangement conveys a right to use such assets. The adoption of HKFRS-Int 4 has resulted in certain contractual arrangements on electricity supply and power purchase of the Group’s subsidiaries and jointly controlled entities being accounted for as finance or operating leases. In prior years, these arrangements were accounted for as normal sale and purchase contracts.

~~Following~~The ~~the~~change ~~adoption~~in ofthis ~~the~~accounting ~~new~~policy ~~HKFRS–Interpretation~~has 4been inapplied ~~2006,~~retrospectively ~~its~~with ~~impact~~comparative onfigures ~~earnings~~restated isaccordingly. anThe ~~increase~~effects inof ~~profit~~the ~~for~~resulting changes ~~the~~are ~~period~~summarised ofas ~~HK$19~~follows: ~~million.~~

~~Page~~Consolidated 23Income Statement


For the year ended 31 December	2006		2005
	HK$M		HK$M
Decrease in revenue	(116	)	(93	)
Decrease in expenses	3,242		2,984
Increase in finance costs	(3,020	)	(2,832	)
Increase/(decrease) in share of results, net of income tax
-jointly controlled entities	40		83
-associated companies	(64	)	(13	)
Increase in income tax expense	(8	)	(77	)

Increase in earnings attributable to shareholders	74		52

Increase in earnings per share, basic and diluted (HK$)	0.03		0.02

~~The~~Consolidated ~~contribution~~Balance ofSheet ~~each major activity to the Group earnings is analysed as follows:~~

	6 months ended 30 June
As at 31 December	2006		2005
	2006				2005				Increase
	HK$M		HK$M
	HK$M		HK$M		HK$M		HK$M		%
Increase in fixed assets	20,154		18,694
Earnings from electricity business in Hong Kong			3,573				3,510		1.8
Decrease in leasehold land and land use rights	(1	)	(1	)
Electricity sales to Chinese mainland from Hong Kong	55				63
Increase in interests in jointly controlled entities	306		200
Generating facilities in Chinese mainland serving Hong Kong (GNPJVC & PSDC)	347				431
Increase in interests in associated companies	—		157
Other power projects in Chinese mainland	106				95
Increase in finance lease receivables	2,866		2,933
Energy business in Australia	287				(8	)
Increase in other current assets	232		235
Electricity business in India	371				279
Increase in income tax payable	(15	)	(15	)
Power projects in Southeast Asia and Taiwan	142				185
Increase in obligations under finance leases	(22,794	)	(21,484	)
Renewable energy business	(25	)			4
Increase in deferred tax liabilities	(259	)	(246	)
Other businesses	(6	)			(5	)
Decrease/(increase) in other non-current liabilities	58		(3	)
One-off gain on formation of OneEnergy	291				—
Increase in net assets	547		470
Earnings from other activities			1,568				1,044		50.2
Unallocated net finance costs			(122	)			(43	)
Unallocated Group expenses			(83	)			(74	)
Total operating earnings			4,936				4,437		11.2
Hok Un redevelopment profit			39				174
Group earnings attributable to shareholders			4,975				4,611		7.9
Weighted average number of shares in issue, million shares			2,408.25				2,408.25
Earnings per share, HK$
Including Hok Un redevelopment profit			2.07				1.91		7.9
Excluding Hok Un redevelopment profit			2.05				1.84		11.2

~~When~~Other ~~compared~~new/revised toHKFRS ~~the~~effective ~~corresponding~~from ~~period~~1 January in2006 ~~2005,~~have ~~earnings~~no ~~per~~significant ~~share,~~impact ~~including~~on ~~Hok Un redevelopment profit,~~the ~~increased~~Group’s byfinancial 7statements.9% ~~whilst earnings per share grew 11.2% after excluding Hok Un redevelopment profit.~~

~~Page~~4. 24Changes in the Group

~~Table~~During the year, the Group (a) formed a jointly controlled entity, OneEnergy Limited (OneEnergy), with Mitsubishi Corporation of ~~Contents~~Japan, (b) transferred its interest in BLCP Power Limited (BLCP) in Thailand to an associated company of OneEnergy, and (c) acquired additional interest in the Huaiji hydro power project in Guangdong, the Chinese mainland.

~~Group’s~~(A) ~~Financial~~Formation ~~Position~~of OneEnergy

~~The~~On 22 March 2006, the Group and ~~has~~Mitsubishi Corporation of Japan formed a ~~strong~~50:50 ~~balance~~jointly ~~sheet~~controlled entity, ~~with~~OneEnergy, ~~total~~for ~~assets~~the aspurpose atof ~~30 June~~acquiring ~~2006~~interests ~~amounting~~in toand ~~HK$126,527~~developing ~~million~~and operating power generation businesses in Southeast Asia and Taiwan. The Group’s interest of 22.4% in Electricity Generating Public Company Limited (~~December~~EGCO) ~~2005:~~in Thailand was injected into OneEnergy upon formation, resulting in a gain of HK$~~123,622~~343 million).

~~Our~~(B) ~~total~~Share ~~assets,~~Transfer ~~which~~of ~~comprise primarily fixed and intangible assets, as well as investments in jointly controlled entities and associated companies, analysed by principal activities, are as follows:~~ BLCP

	30 June 2006		31 December 2005
	HK$M	%	HK$M	%
Energy businesses/investments in
Hong Kong	79,277	62	75,953	61
Australia	28,836	23	30,172	25
Other countries in Asia	9,933	8	8,804	7
Chinese mainland	7,630	6	7,837	6
	125,676	99	122,766	99
Property and other businesses	851	1	856	1
	126,527	100	123,622	100

On 30 October 2006, the Group executed a Share Purchase Agreement with EGCO for the transfer of the Group’s 50% interest in BLCP to EGCO at a total consideration of approximately HK$1,424 million. The gain arising from such share transfer amounted to HK$888 million.

~~Total~~(C) ~~bank~~Additional ~~loans~~Interest ~~and other borrowings, excluding the obligations under finance leases, amounted to HK$29,582 million, details of which are provided~~ in ~~the~~Huaiji ~~“Financing” section. Obligations under finance leases amounting to HK$23,482 million mainly related to the finance lease of CAPCO’s generating assets.~~ Project

~~Business~~On ~~Acquisitions~~31 August 2006, ~~and~~the ~~Developments~~Group acquired an additional 9.9% interest in the Huaiji project at a consideration of HK$39 million. HK$8 million, being the excess of the corresponding share of the net assets acquired over the consideration, has been credited to the consolidated income statement.

~~Pursuant to the Equity Contribution Agreement and its amendment agreement relating to the BLCP power project of Thailand, we are required to make further equity contributions of US$148 million by 2007~~5. Segment Information

~~For~~The ~~our~~Group ~~investments~~operates, inthrough its ~~the Chinese mainland~~subsidiaries, wejointly ~~made~~controlled ~~capital~~entities ~~contributions~~and ofassociated ~~total~~companies, ~~RMB10 million (approximately HK$10 million) to wind power projects~~ in ~~Nanao~~five ~~and~~major ~~Weihai~~geographical ~~and~~regions ~~RMB7 million (approximately HK$6 million) to a coal~~-~~fired~~ ~~power~~Hong ~~project~~Kong, inAustralia, ~~Fangchenggang during~~ the ~~first~~Chinese ~~half~~mainland, ofIndia, ~~2006.~~and ~~Further~~Southeast ~~equity~~Asia ~~contributions~~and ofTaiwan. ~~RMB31~~Information ~~million~~about ~~for~~ the ~~Nanao~~Group’s ~~project~~operations ~~are expected to be made~~ by ~~2007 whereas RMB21 million and RMB503 million of equity contributions are~~ ~~expected~~geographical toregions beis ~~made~~as byfollows: ~~2008 for the Weihai projects and the Fangchenggang projects, respectively.~~

Page 25


	Hong Kong	Australia		Chinese Mainland		India	Southeast Asia & Taiwan	Unallocated Items		Total
	HK$M	HK$M		HK$M		HK$M	HK$M	HK$M		HK$M
*For year ended 31 December 2006*
Revenue	29,555	13,770		131		2,196	46	4		45,702

Segment results	10,761	(551	)	(70	)	962	1,233	(168	)	12,167
Share of results, net of income tax jointly controlled entities	1,532	24		1,058	^(a)	—	322	—		2,936
associated companies	—	2		—		—	112	—		114

Profit/(loss) before net finance costs and income tax	12,293	(525	)	988		962	1,667	(168	)	15,217
Finance costs										(4,762	)
Finance income										138

Profit before income tax										10,593
Income tax expense										(683	)

Profit for the year										9,910
Profit attributable to minority interest										(10	)

Earnings attributable to shareholders										9,900

Capital additions	8,089	1,101		31		2	—	5		9,228
Depreciation and amortisation	4,053	874		36		2	1	2		4,968
Impairment charge	—	1,176		—		—	—	—		1,176

*As at 31 December 2006*
Segment assets owned and leased fixed assets	68,236	14,492		675		3	2	10		83,418
other segment assets	5,705	11,860		499		6,026	1,056	41		25,187
Interests in jointly controlled entities	7,300	1,199		6,523		—	4,151	—		19,173
associated companies	—	8		—		—	—	—		8
Deferred tax assets	—	3,264		41		—	—	—		3,305

Consolidated total assets	81,241	30,823		7,738		6,029	5,209	51		131,091

Segment liabilities obligations under finance leases	22,794	16		—		—	—	—		22,810
other segment liabilities	11,148	3,959		77		534	37	92		15,847
Bank loans and other borrowings	13,053	10,954		253		1,224	—	4,794		30,278
Current and deferred tax liabilities	5,510	193		25		510	2	—		6,240

Consolidated total liabilities	52,505	15,122		355		2,268	39	4,886		75,175

~~Table~~Note (a): Out of ~~Contents~~the HK$1,058 million, HK$751 million was attributed to investments in Guangdong Nuclear Power Joint Venture Company, Limited (GNPJVC) and Hong Kong Pumped Storage Development Company, Limited (PSDC), whose generating facilities serve Hong Kong.

~~Fixed~~5. ~~Assets~~Segment ~~and~~Information ~~Capital Expenditure~~ (continued)

Fixed assets and leasehold land of the Group totalled HK$84,700 million as at 30 June 2006, comprising mainly the investments in the transmission and distribution network and leased generating assets for our Hong Kong electricity business of HK$69,498 million (December 2005: HK$66,724 million) and in the generating facilities of subsidiaries in Australia of HK$14,413 million (December 2005: HK$14,195 million). During the six-month period, we invested HK$2,361 million, of which HK$1,934 million was made by CLP Power Hong Kong, in various fixed assets (including payments for lease premium for land). HK$2,923 million of leased assets, mainly for leased generating assets in Hong Kong, was also added to the Group.


	Hong Kong	Australia	Chinese Mainland		India	Southeast Asia & Taiwan		Unallocated Items		Total
	HK$M	HK$M	HK$M		HK$M	HK$M		HK$M		HK$M
For year ended 31 December 2005
Revenue	28,516	8,045	17		1,876	35		2		38,491

Segment results	10,553	643	(132	)	695	(35	)	(138	)	11,586
Share of results, net of income tax jointly controlled entities	1,782	16	1,102	^(a)	—	282		—		3,182
associated companies	—	—	—		—	127		—		127

Profit/(loss) before net finance costs and income tax	12,335	659	970		695	374		(138	)	14,895
Finance costs										(4,445	)
Finance income										124

Profit before income tax										10,574
Income tax credit										845

Profit for the year										11,419
Loss attributable to minority interest										1

Earnings attributable to shareholders										11,420


Capital additions	8,029	750	2		2	—		1		8,784
Depreciation and amortisation	3,684	663	7		2	1		2		4,359
Impairment charge	—	—	—		—	—		—		—

As at 31 December 2005
Segment assets owned and leased fixed assets	64,621	14,196	669		11	4		8		79,509
other segment assets	5,013	12,374	247		5,845	44		37		23,560
Interests in jointly controlled entities	7,092	1,093	6,888		—	1,646		—		16,719
associated companies	—	5	—		—	1,793		—		1,798
Deferred tax assets	—	2,504	33		—	—		—		2,537

Consolidated total assets	76,726	30,172	7,837		5,856	3,487		45		124,123

Segment liabilities obligations under finance leases	21,484	13	—		—	—		—		21,497
other segment liabilities	11,287	4,271	150		557	44		77		16,386
Bank loans and other borrowings	11,528	11,108	228		1,236	—		5,291		29,391
Current and deferred tax liabilities	5,466	133	27		483	—		—		6,109

Consolidated total liabilities	49,765	15,525	405		2,276	44		5,368		73,383

~~Capital~~Note ~~expenditure~~(a): ~~contracted~~Out ~~but~~of ~~not provided for in~~ the ~~accounts, as at 30 June 2006, amounted to~~ HK$21,~~781~~102 million ~~(December 2005: HK$2~~,~~689~~ ~~million). Other than~~ HK$14760 million ~~(December~~was ~~2005:~~attributed ~~HK$358~~to ~~million)~~investments ~~which~~in ~~was~~GNPJVC ~~for~~and ~~our overseas subsidiaries~~PSDC, ~~these~~whose ~~contracted~~generating ~~amounts~~facilities ~~are~~serve ~~primarily for enhancing our transmission and distribution systems in~~ Hong Kong.

~~Liquidity~~Owing to its growing significance to the Group, India is identified as a reportable segment and ~~Capital~~is ~~Resources~~reported separately. The 2005 comparative segment data has been restated.

AsNo atbusiness ~~30 June~~analysis ~~2006,~~is weshown ~~had liquid~~as ~~funds~~substantially all the principal activities of ~~HK$2,123~~the ~~million~~Group ~~(December~~are ~~2005:~~for ~~HK$2,041~~the ~~million),~~generation ofand ~~which~~supply ~~96%~~of ~~was~~electricity. ~~denominated~~These businesses inare ~~foreign~~managed ~~currency~~and ~~mainly~~operated ~~held~~on byan ~~overseas~~integrated ~~subsidiaries~~basis in ~~India~~each ~~and Australia~~region. ~~The~~It ~~remainder~~is ~~was~~therefore innot ~~Hong~~considered ~~Kong~~appropriate ~~dollars~~to disclose the generation and supply businesses separately.

We strive to maintain an appropriate mix of committed and uncommitted facilities and solicit our facilities from a pool of financial institutions with strong credit standing. As at 30 June 2006, financing facilities totalling HK$40.9 billion were available to the Group, including HK$15.2 billion for TRUenergy and GPEC. Of the available facilities, HK$29.6 ~~billion had been drawn down, of which HK$10~~.~~9 billion~~ was by TRUenergy and GPEC. Facilities totalling HK$7.8 billion were available to CAPCO, of which HK$7.1 billion had been drawn down. The debts of overseas subsidiaries are without recourse to CLP Holdings. Of these borrowings, HK$629 million as at 30 June 2006 are secured by fixed and floating charges over the assets of GPEC and HK$225 million are secured by fixed assets and land use rights in Huaiji. Revenue

~~Our~~An ~~total~~analysis ~~debt~~of tothe ~~total~~Group’s ~~capital~~revenue ~~ratio~~ is as atfollows: ~~30 June 2006 was 36.2%. Interest cover for the six months ended 30 June 2006 was 7.9 times.~~

Financing


	2006	2005
	HK$M	HK$M

Sales of electricity	39,662	34,928
Lease service income (A)	1,500	1,419
Finance lease income	423	453
Sales of gas	3,108	1,801
Other revenue	807	417

	45,500	39,018
Transfer from/(to) Development Fund (B)	202	(527	)

	45,702	38,491

~~The~~(A) ~~Group~~In ~~engaged~~accordance inwith ~~new~~HKFRS-Int ~~financing~~4, ~~activities~~servicing inincome ~~the~~and ~~first~~fuel ~~half~~costs ofreceived ~~2006~~from tolessees ~~support~~with ~~the~~respect ~~expansion of our electricity business in Hong Kong. We continue~~ to ~~adopt~~the aleased ~~prudent~~assets ~~approach~~are tonot ~~all~~part ~~our~~of ~~financial~~the ~~arrangements,~~minimum ~~while~~lease atpayments ~~the~~and ~~same~~are ~~time~~recognised ~~aiming~~as tolease ~~achieve~~service ~~cost effective funding~~income.

In(B) ~~January~~Pursuant ~~2006,~~to ~~through~~the ~~its~~SoC ~~wholly-owned~~Agreement, ~~subsidiary~~if ~~CLP~~the ~~Power~~gross ~~Hong~~tariff ~~Kong~~revenue ~~Financing~~in ~~Limited, CLP Power~~ Hong Kong ~~issued HK$1 billion fixed rate notes due~~ in ~~2016~~any ~~with~~year ~~coupon~~exceeds ~~rate~~or atis ~~4.75%.~~less ~~This~~than ~~issue was made under~~ the ~~Medium~~ ~~Term~~total ~~Note~~of ~~(MTN) Programme set up by CLP Power Hong Kong Financing Limited in 2002. Under~~ the ~~MTN~~operating ~~Programme~~costs, ~~notes~~permitted inreturn anand ~~aggregate~~taxation ~~amount~~charges, ofsuch upexcess toshall ~~US$1.5 billion may~~ be ~~issued~~added ~~and will be unconditionally and irrevocably guaranteed by CLP Power Hong Kong. As at 30 June 2006~~to, ~~notes~~or ~~with~~such adeficiency ~~nominal~~shall ~~value~~be ofdeducted ~~about HK$6~~from,~~340~~ ~~million have been issued under~~ the ~~MTN~~Development ~~Programme~~Fund.

~~Page~~7. 26Operating Lease and Lease Service Payments

~~Table~~In accordance with HKFRS-Int 4, fuel and servicing charges paid to lessors with respect to the leased assets are not part of ~~Contents~~the minimum lease payments and are recognised as lease service payments.

~~Debt~~8. ~~Profile~~Other Income, net

The charts below show the type, interest rate, maturity and currency profiles of borrowings of the Group and CAPCO at 30 June 2006:


	2006		2005
	HK$M		HK$M
Gain on formation of OneEnergy (Note 4(A))	343		—
Gain on transfer of BLCP to EGCO (Note 4(B))	888		—
Impairment charge on fixed assets, before income tax (Note 15)	(1,176	)	—

	55		—

~~Notes:~~Taking into account of income tax effect, the impairment charge on fixed assets was HK$823 million, and the after tax net other income is HK$408 million (note 12).

~~(1)~~9. ~~For~~Operating ~~the Medium Term Note Programme, only the amount of the Notes issued as at 30 June 2006 was included in the total amount of Available Facility.~~Profit

~~(2)~~Operating ~~The~~profit ~~Australian~~is ~~dollar~~stated ~~loans~~after charging/(crediting) ~~were drawn by CLP Australia Finance Pty Ltd for our Australian business whereas~~ the ~~loans~~following: ~~in Indian Rupees were drawn by GPEC. Loan in Renminbi was drawn for a China project.~~

Credit Rating


	2006		2005
	HK$M		HK$M
Charging
Auditor’s remuneration
Audit	30		17
Permissible non-audit services	3		17
Net loss on disposal of fixed assets	216		188


Crediting
Capital gain on disposal of properties	(25	)	(128	)
Net gain on disposal of other assets	—		(37	)

In10. ~~May~~Finance ~~2006,~~Costs ~~Moody’s upgraded CLP Power Hong Kong’s foreign currency issuer rating from A1 to Aa3, thereby matching CLP Power Hong Kong’s local currency rating~~ and foreign currency bond rating. This followed Moody’s examination of corporate sector ratings throughout the Asia-Pacific region in light of a revision of its rating methodology for “Foreign-Currency Ceilings”. Income

Page 27


	2006		2005
	HK$M		HK$M
Finance costs:
Interest expenses on bank loans and overdrafts	949		905
other borrowings
- wholly repayable within five years	48		166
- not wholly repayable within five years	576		261
finance charges under finance leases	3,020		2,832
Development Fund (A)	265		274
customers’ deposits and others	97		69
Subscription interest on outstanding purchase consideration for renewable projects	29		—
Other finance charges	45		62
Fair value loss on derivative financial instruments
Cash flow hedges, transfer from equity	1		174
Transactions not qualifying as hedges	2		—
Other net exchange loss/(gain)	5		(1	)

	5,037		4,742
Less: amount capitalised	(275	)	(297	)

	4,762		4,445

Finance income:
Interest income on short-term investments and bank deposits	137		122
advance to a jointly controlled entity	1		2

	138		124

~~Table~~(A) In accordance with the provisions of ~~Contents~~the SoC Agreement, CLP Power Hong Kong is required to credit, to a Rate Reduction Reserve in its financial statements, a charge of 8% per annum on the average balance of the Development Fund.

~~In June 2006, S&P re-affirmed the long-term and short-term credit ratings of CLP Holdings at A/A-1 and CLP Power Hong Kong at A+/A-1 with stable outlook~~11. ~~This~~Income reflects CLP Holdings’ good financial profile, which is supported by good cash flows from our Hong Kong operations. S&P quoted in its credit rating reports that although negative regulatory developments for CLP’s Hong Kong operations could result in downward pressure on the rating, there is some scope for a modest reduction in the rate of return without a simultaneous reduction in credit rating, in view of CLP Power Hong Kong’s good financial profile. S&P also re-affirmed the long-term credit ratings of CLP Australia Holdings Pty Ltd at A- with stable outlook. Tax

~~In July~~Income ~~2006,~~tax ~~Moody’s~~in ~~re-affirmed~~ the ~~long-term~~consolidated ~~and short-term credit ratings of CLP Holdings at A1/P-1 and CLP Power Hong Kong at Aa3/P-1 with stable outlook. Moody’s recognised CLP Holdings’ solid liquidity profile, supported by the~~income ~~Group’s~~statement ~~strong~~represents ~~access to domestic and international bank capital markets, as well as its well-managed debt maturity profile. At~~ the ~~same~~income ~~time,~~tax ~~Moody’s~~of ~~opined that CLP Holdings’ overall risk profile is tempered by~~ the ~~increasing financial~~Company ~~leverage~~ and ~~business~~subsidiaries ~~risks arising from the company’s diversification initiatives~~ and ~~overseas~~is ~~expansion.~~analysed below:

Separately, Fitch assigned its self-initiated long-term issuer default rating of A+ to CLP Holdings and CLP Power Hong Kong with stable outlook and BBB+ to CLP Australia Holdings Pty Ltd with stable outlook.



	2006		2005
	HK$M		HK$M
Current income tax
Hong Kong	779		1,009
Outside Hong Kong	100		67

	879		1,076
	---------		---------
Deferred tax
Hong Kong	346		363
Outside Hong Kong, excluding tax consolidation benefit	(542	)	(280	)

	(196	)	83
Tax consolidation benefit from Australia	—		(2,004	)

	(196	)	(1,921	)
	---------		---------

	683		(845	)

~~The~~Hong ~~credit~~Kong ~~ratings~~profits oftax ~~major~~has ~~companies~~been ~~within~~provided ~~the Group as~~ at ~~30 June~~the ~~2006~~rate ~~are~~of ~~summarised~~17.5% ~~below~~(2005: 17.5%) ~~All~~on ~~ratings~~the ~~remain~~estimated assessable atprofits ~~investment~~for ~~grade~~the ~~which~~year. ~~can~~Income ~~facilitate~~tax ~~and~~on ~~enhance~~profits ~~our~~assessable ~~position~~outside inHong ~~local~~Kong ~~and~~has ~~overseas~~been ~~business activities,~~provided ~~including~~at ~~fund~~the ~~raising,~~rates ~~investment~~prevailing ~~and~~in ~~new~~the ~~business~~respective ~~opportunities~~jurisdictions.

CLP Holdings

CLP Power Hong Kong

CLP AustraliaHoldings S&P

HKSAR Government (1)

S&P

Moody’s

S&P

Moody’s

S&P

Moody’s

Long-term Rating

Foreign Currency

A+

Aa3

A-

Outlook

Stable

Positive

Local Currency

A+

Aa3

A-

Aa3

Outlook

Stable

Positive

Short-term Rating

Foreign Currency

A-1

P-1

A-1

P-1

—

A-1+

P-1

Local Currency

A-1

—

A-1

—

A-1+

—

12.

Earnings Attributable to Shareholders

~~Note (1):~~The following ~~rating~~analysis ~~updated~~of asearnings atis ~~27 July~~outside ~~2006~~the requirements of HKFRS and is included to give further information to investors on the source of the Group earnings:

Risk Management


	2006			2005
	HK$M	HK$M		HK$M	HK$M
Electricity business in Hong Kong		7,290			7,047
Electricity sales to Chinese mainland from Hong Kong	119			120
Generating facilities in Chinese mainland serving Hong Kong (GNPJVC and PSDC)	751			760
Other power projects in Chinese mainland	245			205
Energy business in Australia	169			200
Electricity business in India	916			603
Power projects in Southeast Asia and Taiwan	405			363
Other businesses	4			140
Other income, net (Note 8)	408			—

Earnings from other activities		3,017			2,391
Unallocated net finance costs		(283	)		(151	)
Unallocated Group expenses		(168	)		(138	)

Total operating earnings		9,856			9,149
Hok Un redevelopment profit		44			267
Tax consolidation benefit from Australia		—			2,004

Earnings attributable to shareholders		9,900			11,420

The Group’s investments and operations have resulted in exposures to foreign currency risks, interest rate risks, credit risks and price risks associated with the sales and purchases of electricity in Australia13. We actively manage such risks by using different derivative instruments with an objective to minimise the impact of exchange rate, interest rate and electricity price fluctuations on earnings, reserves and tariff charges to customers and monitor our risk exposures with the assistance of “Value-at-Risk” (VaR) methodology. VaR is a risk measurement that probabilistically calculates the market risk of a portfolio using historical volatility over a defined holding period. Other than certain electricity trading activities engaged by our Australian business, all derivative instruments are employed solely for hedging purposes. Dividends

Page 28


	2006		2005
	HK$ per share	HK$M	HK$ per share	HK$M
Interim dividends paid	1.50	3,612	1.44	3,468
Final dividend proposed	0.89	2,144	0.83	1,999
Special final dividend proposed	0.02	48	0.11	265

	2.41	5,804	2.38	5,732

~~Table~~At the Board meeting held on 28 February 2007, the Directors recommended a final dividend of HK$0.89 ~~Contents~~(2005: HK$0.83) per share and a special final dividend of HK$0.02 (2005: HK$0.11) per share. Such dividends are to be proposed at the Annual General Meeting on 24 April 2007 and are not reflected as dividends payable in the financial statements, but as a separate component of the shareholders’ funds at 31 December 2006.

~~Foreign~~14. ~~Currency~~Earnings ~~Risks~~per Share

The ~~Group’s~~prescribed ~~foreign~~figure ~~currency~~for earnings ~~exposures~~per ~~primarily~~share ~~arise~~includes ~~from~~(a) the ~~CLP~~Hok ~~Power~~Un ~~Hong~~redevelopment ~~Kong’s~~profit ~~significant~~(Note ~~foreign~~12), ~~currency~~and ~~obligations~~(b) for ~~related to its U.S. dollar-denominated debt~~2005, ~~nuclear~~the ~~power~~tax ~~purchase~~consolidation ~~off-take~~benefit ~~commitments,~~from ~~fuel~~Australia ~~and~~(Note ~~other purchase-related~~11) ~~payments~~ and ~~CLP’s~~is ~~investments~~computed ~~abroad.~~as follows:

In order to mitigate the potential impact of foreign currency movement on electricity tariffs in Hong Kong, CLP Power Hong Kong continues to hedge a significant portion of its U.S. dollar obligations, provided that the hedging can be accomplished at rates below the Hong Kong Special Administrative Region Government’s historical target peg rate of 7.80. We will review this policy periodically in light of changing market conditions to optimise benefits.


	2006	2005
Earnings attributable to shareholders (HK$M)	9,900	11,420

Weighted average number of shares in issue (thousand shares)	2,408,246	2,408,246

Earnings per share (HK$)	4.11	4.74

~~For~~To ~~investments~~enable ~~overseas,~~investors weto dobetter ~~not hedge~~understand ~~translation exposure arising from consolidation of~~ the Group’s ~~net~~results, ~~assets~~an ~~outside~~additional ~~Hong Kong because the investments are long-term and effective hedging instruments are either limited or costly. The translation gains or losses do not affect the Group’s cash flow or~~ earnings ~~until~~per ~~an investment is sold. Our primary foreign exchange risk is at the individual project company level where non-functional currency exposures, if not managed properly, can lead to significant~~share ~~financial distress. Therefore~~figure, ~~our~~excluding ~~primary risk mitigation is to ensure that project-level debt financings are implemented on a local currency basis to~~ the ~~maximum~~Hok ~~extent~~Un ~~possible.~~redevelopment ~~Certain~~profit ~~investments have incorporated direct~~ and ~~indirect~~one-off ~~indexation in~~tax ~~their~~consolidation ~~project~~benefit ~~agreements to reduce earnings impact~~ from ~~foreign~~Australia, ~~exchange fluctuation and this~~ is ~~taken~~set ~~into~~out ~~account~~below: ~~in establishing the level of local currency financing.~~

Interest Rate Risks


	2006		2005
	HK$M		HK$M
Earnings attributable to shareholders	9,900		11,420
Less: Tax consolidation benefit from Australia	—		(2,004	)
Hok Un redevelopment profit	(44	)	(267	)

Adjusted earnings attributable to shareholders	9,856		9,149

Earnings per share (HK$)
- Excluding Hok Un redevelopment profit and tax consolidation benefit from Australia	4.09		3.80

~~The~~Basic ~~Group~~and ~~utilises~~fully ~~fixed~~diluted ~~rate~~earnings ~~borrowings~~per ~~and~~share ~~interest~~are ~~rate~~the ~~swaps~~same toas ~~mitigate~~ the ~~impact~~Company did not have any diluting ofequity ~~interest~~instruments ~~rate~~throughout ~~volatility~~the onyear ~~current~~ended ~~and~~31 December ~~future~~2006 ~~corporate~~(2005: ~~profitability~~nil).

~~CLP Power Hong Kong conducts annual reviews to determine a preferred fixed/floating interest rate mix appropriate for its business profile~~15. ~~For~~Fixed ~~the Group’s overseas investments~~Assets, ~~each~~Leasehold ~~project~~Land ~~company has developed its own hedging programme taking into consideration project debt service sensitivities to interest rate movements, lender requirements, tax~~ and ~~accounting~~Land ~~implications.~~Use Rights

~~Credit~~Fixed ~~Risks~~assets, leasehold land and land use rights totalled HK$85,653 million (2005: HK$81,742 million). Movements in the accounts are as follows:

~~All~~(A) ~~finance-related~~Fixed hedging transactions and deposits of CLP Holdings and its principal subsidiaries are made with counter-parties with acceptable credit ratings to minimise credit exposure. The Group assigns limits to its counter-parties and monitors potential exposures to each counter-party utilising the VaR methodology. All derivative transactions are entered into at the sole credit of the respective subsidiaries and affiliates and the counter-parties have no recourse to CLP Holdings for any change in the market value of derivatives. Assets

Page 29


	Freehold Land and Buildings				Plant, Machinery and Equipment
	Owned		Leased^(a)		Owned		Leased^(a)		Total
	HK$M		HK$M		HK$M		HK$M		HK$M
Net book value, as at 1 January 2006	6,682		5,005		49,358		18,464		79,509
Additions	459		277		5,396		3,029		9,161
Transfers and disposals	(14	)	(7	)	(291	)	(134	)	(446	)
Depreciation	(219	)	(256	)	(2,579	)	(1,697	)	(4,751	)
Impairment charge	(5	)	—		(1,171	)	—		(1,176	)
Exchange differences	38		—		939		144		1,121

Net book value, as at 31 December 2006	6,941		5,019		51,652		19,806		83,418

Cost	9,136		9,597		78,686		38,173		135,592
Accumulated depreciation and impairment	(2,195	)	(4,578	)	(27,034	)	(18,367	)	(52,174	)

Net book value, as at 31 December 2006	6,941		5,019		51,652		19,806		83,418

~~Table~~Note (a): The above leased assets include CAPCO’s operational plant and associated fixed assets, which are deployed for the generation of ~~Contents~~electricity supply to CLP Power Hong Kong under the Electricity Supply Contract between the two parties. Such arrangement has been accounted for as a finance lease in accordance with HKFRS-Int 4.

~~Energy~~(B) ~~Price~~Leasehold ~~Risk~~Land and Land Use Rights

Our Australian business is a vertically integrated business involved in power generation, gas infrastructure and electricity and gas retail sales operating in the National Energy Market (NEM). Because of its vertically integrated business structure, a majority of TRUenergy’s cash flows are internally hedged as a result of the combination of a balance in its generation and retail portfolio along with its diversified generation mix (merit order, fuel type, multiple units). TRUenergy has also entered into energy contracts, such as swaps and option contracts, to help reduce the impact on earnings of the volatility of NEM pool prices.


	HK$M
Net book value, as at 1 January 2006	2,233
Additions	52
Amortisation	(52	)
Exchange differences	2

Net book value, as at 31 December 2006	2,235

Cost	2,393
Accumulated amortisation	(158	)

Net book value, as at 31 December 2006	2,235

~~In addition to its physical market position, TRUenergy participates in energy trading in the over-the-counter bilateral and exchange-traded markets~~16. ~~While~~Goodwill ~~the majority of energy trading is in support of marketing TRUenergy’s unhedged generation capacity~~ and ~~gas~~Other ~~positions,~~Intangible ~~this activity does create exposures which must be actively monitored and managed.~~ Assets

TRUenergy manages energy price risks through an established risk management framework consisting of policies to place appropriate limits on overall energy market exposures, delegations of authority on trading, pre-defined product lists, regular reporting of exposures, and segregation of duties. The corporate governance process also includes the oversight by a Risk Management Committee which acts on behalf of TRUenergy’s Board.


	Goodwill		Other Intangible Assets		Total
	HK$M		HK$M		HK$M
Net carrying value, as at 1 January 2005	24		—		24
Acquisition of a subsidiary
- as previously reported	7,021		1,360		8,381
- purchase consideration revised (A)	(1,019	)	—		(1,019	)
- valuation of contracted customers (B)	(185	)	185		—
- as restated	5,817		1,545		7,362
Amortisation	—		(66	)	(66	)
Exchange differences	(328	)	(62	)	(390	)

Net carrying value, as at 31 December 2005	5,513		1,417		6,930


Cost	5,513		1,481		6,994
Accumulated amortisation	—		(64	)	(64	)

Net carrying value, as at 31 December 2005	5,513		1,417		6,930


Net carrying value, as at 1 January 2006	5,513		1,417		6,930
Additions	—		15		15
Amortisation	—		(165	)	(165	)
Exchange differences	441		105		546

Net carrying value, as at 31 December 2006	5,954		1,372		7,326


Cost	5,954		1,615		7,569
Accumulated amortisation	—		(243	)	(243	)

Net carrying value, as at 31 December 2006	5,954		1,372		7,326

~~TRUenergy~~(A) ~~adopts~~In ~~VaR~~respect ~~methodology~~of asthe acquisition of the MEB from an ~~indicator~~affiliated company of ~~the~~Singapore ~~notional~~Power ~~energy~~Limited ~~portfolio~~in ~~value~~May ~~exposure~~2005, ~~with~~a ~~respect~~claim towas ~~potential~~lodged ~~adverse~~with ~~movements~~this inaffiliated ~~forward~~company ~~electricity~~prior ~~contract~~to ~~prices.~~the Inend ~~addition,~~of ~~TRUenergy~~2005. ~~utilises~~A asettlement ~~Spot~~was ~~Market~~subsequently ~~Risk~~reached ~~Measure as~~in aApril ~~stress~~2006, ~~test~~resulting ~~measurement~~in ofa reduction in the ~~risk~~purchase ofconsideration ~~its~~and ~~near-term~~reflected ~~cash~~as ~~flows~~a ~~from~~reduction ~~extreme~~in ~~spot~~goodwill ~~market~~of ~~price~~HK$1,019 ~~events~~million.

~~Page~~(B) 30A further review of the valuation of contracted customers in Australia resulted in a reallocation of HK$185 million from goodwill to other intangible assets.

~~Table~~17. ofTrade ~~Contents~~and Other Receivables

Derivative Instruments


	2006	2005
	HK$M	HK$M
Trade receivables (ageing analysis is shown below)	5,586	4,541
Deposits and prepayments	1,332	1,107
Other receivables	1,000	1,019
Dividend receivable from a jointly controlled entity	858	87
Current accounts with jointly controlled entities	23	5

	8,799	6,759

AsThe atGroup ~~30 June~~has ~~2006,~~established ~~the~~credit ~~Group~~policies ~~had~~for ~~gross~~customers ~~outstanding~~in ~~derivative~~each ~~instruments~~of ~~amounting~~its tocore ~~HK$65~~businesses.5 ~~billion.~~CLP ~~The~~Power Hong ~~fair~~Kong’s ~~value~~credit ofpolicy ~~these~~in ~~derivative~~respect ~~instruments~~of ~~was~~receivables atarising afrom ~~net~~its ~~deficit~~principal ofelectricity ~~HK$142~~business ~~million,~~is ~~which~~to ~~represents~~allow ~~the~~customers ~~net~~to ~~amount~~settle wetheir ~~would pay~~electricity ifbills ~~these~~within ~~contracts~~2 ~~were~~weeks ~~closed~~after ~~out~~issue. onCustomers’ ~~30 June~~receivable ~~2006.~~balances ~~The~~are ~~breakdown~~generally secured by cash ~~type~~deposits ~~and~~or ~~maturity~~bank ~~profile~~guarantees. ofFor subsidiaries outside Hong Kong, the ~~Group’s~~credit ~~derivative~~term ~~instruments~~for ~~are~~trade ~~shown~~receivables ~~below:~~ranges from 12 to 60 days.

	Notional Amount		Fair Value Gain/(Loss)
	30 June 2006	31 December 2005	30 June 2006		31 December 2005
	HK$M	HK$M	HK$M		HK$M
CLP Group
Forward Foreign Exchange Contracts	43,085	42,828	(243	)	(311	)
Interest Rate Swaps	7,998	9,693	131		(48	)
Currency Swaps	2,340	4,680	(46	)	125
Renewable Energy Certificates	39	100	16		13
Energy Hedging & Trading Options	647	878	44		134
Energy Hedging & Trading Swap Contracts	11,420	11,469	(44	)	71
	65,529	69,648	(142	)	(16	)
CAPCO
Interest Rate Swaps	3,885	4,208	81		25
Total	69,414	73,856	(61	)	9

The ageing analysis of the trade receivables, after provisions, as at 31 December is as follows:

Maturity Profile


	2006	2005
	HK$M	HK$M
Below 30 days (including amount not yet due)	5,176	4,350
31-90 days	267	111
Over 90 days	143	80

	5,586	4,541

~~With~~18. ~~the~~Trade ~~adoption of Hong Kong Accounting Standard 39 “Financial Instruments: Recognition~~ and ~~Measurement”,~~Other ~~all derivatives have been recognised in the balance sheet at their fair value.~~ Payables

Page 31


	2006	2005
	HK$M	HK$M
Trade payables (ageing analysis is shown below)	3,121	3,116
Other payables and accruals	1,648	1,395
Current accounts with jointly controlled entities	1,124	1,127
Amount due to a jointly controlled entity	—	441

	5,893	6,079

~~Table~~The ageing analysis of ~~Contents~~the trade payables as at 31 December is as follows:

Condensed Consolidated Income Statement


	2006	2005
	HK$M	HK$M
Below 30 days (including amount not yet due)	3,098	3,082
31-90 days	1	2
Over 90 days	22	32

	3,121	3,116

		(Unaudited) 6 months ended 30 June
	Note	2006HK$M			2005 HK$M
						(Restated	)
Revenue	5,6		21,412			16,361
Expenses
Purchases of electricity, gas and distribution services	3		(9,583	)		(6,453	)
Staff expenses			(908	)		(665	)
Fuel and other operating costs			(2,524	)		(1,989	)
Depreciation and amortisation			(2,427	)		(2,067	)
			(15,442	)		(11,174	)
Other gain	4		291			—
Operating profit	6,7		6,261			5,187
Finance costs	8		(2,419	)		(2,072	)
Finance income	8		242			251
Share of results, net of tax
jointly controlled entities	9, 16		1,362			1,664
associated companies	9, 17		112			51
Profit before taxation			5,558			5,081
Taxation	10		(575	)		(470	)
Profit after taxation			4,983			4,611
Minority interest			(8	)		—
Earnings attributable to shareholders	11		4,975			4,611
Dividends	12
First interim paid			1,204			1,156
Second interim proposed			1,204			1,156
			2,408			2,312
Earnings per share, basic and diluted	13	HK$	2.07		HK$	1.91

19.

Bank Loans and Other Borrowings

Page 32


	2006	2005
	HK$M	HK$M
Current
Short-term loans	1,798	867
Long-term bank loans	2,466	301
Other long-term borrowings
USD Yankee notes due 2006	—	2,340

	4,264	3,508
	--------	--------
Non-current
Long-term bank loans	15,375	16,447
Other long-term borrowings
MTN programme (USD) due 2012	2,367	2,485
MTN programme (HKD) due 2013 to 2015	3,000	3,000
MTN programme (HKD) due 2016	1,000	—
EPN and MTN programme (AUD) due 2012	3,966	3,667
EPN and MTN programme (AUD) due 2015	306	284

	26,014	25,883
	--------	--------

Total borrowings	30,278	29,391

~~Table~~20. ofObligations ~~Contents~~under Finance Leases

The Group’s ~~Condensed~~obligations ~~Consolidated~~under ~~Balance~~finance ~~Sheet~~leases arise from the power purchase arrangements which are accounted for as finance leases in accordance with HKFRS-Int 4. As at 31 December 2006, the Group’s obligations represented predominantly its arrangement with CAPCO in respect of the operational generating plant and associated fixed assets of the Hong Kong electricity business.

		(Unaudited	)	(Restated	)
		30 June 2006		31 December 2005
	Note	HK$M		HK$M
Non-current assets
Fixed assets	14	82,492		79,518
Leasehold land and land use rights	14	2,208		2,233
Goodwill and other intangible assets	15	6,905		6,930
Interests in jointly controlled entities	16	18,799		16,661
Interests in associated companies	17	7		1,697
Finance lease receivables	18	2,519		2,652
Deferred tax assets		2,461		2,537
Derivative instruments	19	228		260
Other non-current assets		161		506
		115,780		112,994
Current assets
Inventories – stores and fuel		570		596
Trade and other receivables	20	7,005		6,524
Finance lease receivables	18	158		165
Derivative instruments	19	891		1,302
Bank balances, cash and other liquid funds	21	2,123		2,041
		10,747		10,628
Current liabilities
Customers’ deposits		(3,353	)	(3,308	)
Trade and other payables	22	(6,078	)	(6,079	)
Taxation payable		(572	)	(376	)
Bank loans and other borrowings	23	(4,705	)	(3,508	)
Obligations under finance leases	24	(1,912	)	(1,803	)
Derivative instruments	19	(829	)	(1,134	)
		(17,449	)	(16,208	)
Net current liabilities		(6,702	)	(5,580	)
Total assets less current liabilities		109,078		107,414

21.

Reserves

Page 33


	Capital Redemption Reserve	Translation & Hedging Reserves		Other Reserves		Retained Profits		Total
	HK$M	HK$M		HK$M		HK$M		HK$M
Balance as at 1 January 2005, as previously reported	2,482	633		98		28,811		32,024
Changes in accounting policies (Note 3)	—	16		—		430		446

Balance as at 1 January 2005, as restated	2,482	649		98		29,241		32,470
Net exchange losses not recognised in income statement	—	(1,069	)	—		—		(1,069	)
Cash flow hedges, net of tax	—	54		—		—		54
Revaluation of assets, net of tax	—	—		117		—		117
Earnings attributable to shareholders	—	—		—		11,420		11,420
Dividends paid	—	—		—		(5,587	)	(5,587	)
Capital redemption by a subsidiary	—	—		417		(417	)	—
Share of movements in reserves of jointly controlled entities and associated companies	—	16		34		(31	)	19

Balance as at 31 December 2005	2,482	(350	)	666		34,626	^(a)	37,424


Balance as at 1 January 2006, as per above	2,482	(350	)	666		34,626		37,424
Net exchange gains not recognised in income statement	—	1,425		—		—		1,425
Cash flow hedges, net of tax	—	(467	)	—		—		(467	)
Revaluation of assets, net of tax	—	—		22		—		22
Revaluation reserves realised upon depreciation	—	—		(3	)	3		—
Earnings attributable to shareholders	—	—		—		9,900		9,900
Dividends paid	—	—		—		(5,876	)	(5,876	)
Share of movements in reserves of jointly controlled entities and associated companies	—	82		140		(17	)	205

Balance as at 31 December 2006	2,482	690		825		38,636	^(a)	42,633

~~Table~~Note (a): The proposed final dividends as at 31 December 2006 and balance of ~~Contents~~retained profits after the proposed final dividends were HK$2,192 million (2005: HK$2,264 million) and HK$36,444 million (2005: HK$32,362 million) respectively.

~~Condensed~~22. ~~Consolidated~~SoC ~~Balance~~Reserve ~~Sheet (continued)~~ Accounts

		(Unaudited	)	(Restated	)
		30 June 2006		31 December 2005
	Note	HK$M		HK$M
Financed by:
Equity
Share capital	25	12,041		12,041
Share premium		1,164		1,164
Reserves
Proposed dividends		1,204		2,264
Others		37,576		34,816
Shareholders’ funds		51,985		50,285
Minority interest		120		111
		52,105		50,396
Non-current liabilities
Bank loans and other borrowings	23	24,877		25,883
Obligations under finance leases	24	21,570		19,694
Deferred tax liabilities		5,722		5,579
Derivative instruments	19	432		444
Fuel clause account		91		323
Scheme of Control (SoC) reserve accounts	26	3,413		4,174
Other non-current liabilities		868		921
		56,973		57,018
Equity and non-current liabilities		109,078		107,414

The Development Fund and Rate Reduction Reserve of the Group’s major subsidiary, CLP Power Hong Kong, are collectively referred to as SoC reserve accounts in the consolidated balance sheet. The respective balances at the end of the year are:

/s/ W. E. Mocatta /s/ Andrew Brandler /s/ Peter P. W. Tse W. E. Mocatta Vice Chairman Andrew Brandler Chief Executive Officer Peter P. W. Tse Chief Financial Officer


	2006	2005
	HK$M	HK$M
SoC reserve accounts
Development Fund	2,932	3,685
Rate Reduction Reserve	414	489

	3,346	4,174

~~Hong~~23. ~~Kong,~~Contingent ~~15 August 2006~~ Liabilities

~~Page~~Under 34the original power purchase agreement between GPEC and its off-taker GUVNL, GUVNL was required to make a ‘deemed generation incentive’ payment to GPEC when the plant availability was above 68.5% (70% as revised subsequently). GUVNL has been making such payments since December 1997. In September 2005, GUVNL filed a petition before the Gujarat Electricity Regulatory Commission claiming that the ‘deemed generation incentive’ payment should not be paid for the period when the plant was using naphtha as fuel instead of gas. GUVNL’s contention is based on a 1995 Government of India notification which disallowed ‘deemed generation incentive’ for naphtha based power plants. The total amount of the claim plus interest amounts to about HK$1,275 million.

~~Table~~On the basis of ~~Contents~~legal advice that has been sought, the Directors are of the opinion that no provision is required to be made in the financial statements in respect of this matter.

~~Condensed~~24. ~~Consolidated~~Events ~~Statement~~after ofthe ~~Changes~~Balance inSheet ~~Equity~~ Date

(Unaudited)	ShareCapital	SharePremium	CapitalRedemptionReserve	Other Reserves		RetainedProfits		MinorityInterest	Total
	HK$M	HK$M	HK$M	HK$M		HK$M		HK$M	HK$M
Balance as at 1 January 2006, as previously reported	12,041	1,164	2,482	328		34,144		111	50,270
Adjustments for adoption of HKFRS (Int 4) – Leases (Note 2)	—	—	—	18		108		—	126
Balance as at 1 January 2006, as restated	12,041	1,164	2,482	346		34,252		111	50,396
Exchange differences on translation of:
subsidiaries	—	—	—	51		—		1	52
jointly controlled entities	—	—	—	76		—		—	76
designated hedges	—	—	—	3		—		—	3
Net gain not recognised in the income statement	—	—	—	130		—		1	131
Cash flow hedges, net of tax	—	—	—	(167	)	—		—	(167	)
Revaluation of assets, net of tax	—	—	—	33		—		—	33
Earnings for the period	—	—	—	—		4,975		8	4,983
Dividends paid
2005 finals	—	—	—	—		(2,264	)	—	(2,264	)
2006 interim	—	—	—	—		(1,204	)	—	(1,204	)
Share of movements in reserves of
jointly controlled entities	—	—	—	223		(8	)	—	215
associated company	—	—	—	(18	)	—		—	(18	)
Balance as at 30 June 2006	12,041	1,164	2,482	547		35,751	(a)	120	52,105
Company and subsidiaries	12,041	1,164	2,482	236		32,556		120	48,599
Jointly controlled entities	—	—	—	311		3,193		—	3,504
Associated company	—	—	—	—		2		—	2
Balance as at 30 June 2006	12,041	1,164	2,482	547		35,751		120	52,105
Balance as at 1 January 2005, as per 2005 accounts	12,041	1,164	2,482	731		28,811		—	45,229
Adjustments for adoption of HKFRS (Int 4) – Leases	—	—	—	(7	)	56		—	49
Balance as at 1 January 2005, as restated	12,041	1,164	2,482	724		28,867		—	45,278
Exchange differences on translation of:
subsidiaries	—	—	—	(200	)	—		—	(200	)
jointly controlled entities	—	—	—	(6	)	—		—	(6	)
associated companies	—	—	—	(81	)	—		—	(81	)
designated hedges	—	—	—	(6	)	—		—	(6	)
Net losses not recognised in the income statement	—	—	—	(293	)	—		—	(293	)
Cash flow hedges, net of tax	—	—	—	65		—		—	65
Earnings for the period	—	—	—	—		4,611		—	4,611
Dividends paid
2004 finals	—	—	—	—		(2,119	)	—	(2,119	)
2005 interim	—	—	—	—		(1,156	)	—	(1,156	)
Capital redemption by a subsidiary	—	—	—	417		(417	)	—	—
Share of movements in reserves of
jointly controlled entities	—	—	—	(9	)	(14	)	—	(23	)
associated company	—	—	—	(6	)	—		—	(6	)
Balance as at 30 June 2005	12,041	1,164	2,482	898		29,772	(b)	—	46,357
Company and subsidiaries	12,041	1,164	2,482	856		25,755		—	42,298
Jointly controlled entities	—	—	—	35		3,321		—	3,356
Associated companies	—	—	—	7		696		—	703
Balance as at 30 June 2005	12,041	1,164	2,482	898		29,772		—	46,357
Notes:
(a) The proposed interim dividend as at 30 June 2006 and balance of retained profits after the proposed interim dividend were HK$1,204 million and HK$34,547 million respectively.
(b) The proposed interim dividend as at 30 June 2005 and balance of retained profits after the proposed interim dividend were HK$1,156 million and HK$28,616 million respectively.

In January 2007, TRUenergy entered into a power station swap agreement with AGL Energy Limited (“AGL”), subject to Australian Competition and Consumer Commission clearance and other third party consents. TRUenergy will sell its 1280MW Torrens Island Power Station to AGL for A$417 million (approximately HK$2,564 million) in exchange for AGL’s 180MW Hallett Power Station of A$117 million (approximately HK$719 million) plus cash of A$300 million (approximately HK$1,845 million). The transaction also involves electricity and wholesale gas supply and delivery arrangements in connection with the operation of these power stations. It is expected that the transaction will be completed in July 2007.

~~Page~~SUPPLEMENTARY 35INFORMATION ON TREASURY ACTIVITIES

~~Table~~The Group has engaged in new financing activities in 2006 to support the expansion of ~~Contents~~our electricity business in Hong Kong.

In 2006, CLP Power Hong Kong arranged ~~Condensed~~HK$1.5 ~~Consolidated~~billion ~~Cash~~of ~~Flow~~new ~~Statement~~credit facilities in form of bond issuances and bank loan facilities. In January 2006, through its wholly-owned subsidiary CLP Power Hong Kong Financing Limited, CLP Power Hong Kong issued HK$1 billion fixed rate notes due in 2016 with a coupon rate at 4.75%. This issue was made under the Medium Term Note (MTN) Programme set up by CLP Power Hong Kong Financing Limited in 2002. In addition, HK$0.5 billion of bank loan was drawn down at an attractive interest rate margin during the year.

		(Unaudited) 6 months ended 30 June
		2006				2005
	Note	HK$M		HK$M		HK$M		HK$M
						(Restated	)	(Restated	)
Operating activities
Net cash inflow from operations	27	7,784				5,905
Operating interest paid		(2,183	)			(1,755	)
Interest received		240				252
Profits tax paid		(179	)			(170	)
Net cash inflow from operating activities				5,662				4,232
Investing activities
Capital expenditure		(2,840	)			(2,617	)
Capitalised interest paid		(150	)			(143	)
Proceeds from disposal of fixed assets		57				4
Net cash outflow for acquisition of a subsidiary		—				(11,318	)
Net cash inflow on settlement of derivative instruments		78				—
Investments in and advances from/(to) jointly controlled entities		26				(42	)
Dividends received from investments
- jointly controlled entities		1,498				1,639
- associated company		—				31
Net cash outflow from investing activities				(1,331	)			(12,446	)
Net cash inflow/(outflow) before financing activities				4,331				(8,214	)
Financing activities
Proceeds from long-term borrowings		2,950				14,181
Repayment of long-term borrowings		(4,011	)			(6,103	)
Repayment of finance lease obligations		(903	)			(813	)
Increase in short-term borrowings		1,218				3,644
Dividends paid		(3,468	)			(3,275	)
Net cash (outflow)/inflow from financing activities				(4,214	)			7,634
Net increase/(decrease) in cash and cash equivalents				117				(580	)
Cash and cash equivalents at beginning of period				2,041				2,520
Effect of exchange rate changes				(35	)			(8	)
Cash and cash equivalents at end of period				2,123				1,932
Analysis of balances of cash and cash equivalents
Short-term investments				171				69
Deposits with banks				1,756				1,728
Cash at banks and on hand				196				135
				2,123				1,932

In January 2007, CLP Power Hong Kong issued under the MTN Programme another tranche of HK$1 billion fixed rate notes due in 2017 with a coupon rate at 4.38%.

~~Page~~As 36at 31 December 2006, financing facilities totalling HK$42.5 billion were available to the Group, including HK$16.2 billion for TRUenergy and GPEC. Of the facilities available, HK$30.3 billion had been drawn down, of which HK$12.2 billion relates to TRUenergy and GPEC. Facilities totalling HK$7.1 billion were available to CAPCO, of which HK$6.3 billion were drawn down.

~~Table~~Our oftotal ~~Contents~~debt to capital ratio as at 31 December 2006 was 35.1% and interest cover was 7 times.

~~Notes~~S&P toand Moody’s re-affirmed the ~~Condensed~~long-term ~~Consolidated~~credit ~~Interim~~ratings ~~Accounts~~of CLP Holdings at “A” and “A1” with stable outlook in June and July 2006 respectively.

1In May 2006, Moody’s upgraded CLP Power Hong Kong’s foreign currency issuer rating from “A1” to “Aa3”, thereby matching CLP Power Hong Kong’s local currency rating and foreign currency bond rating. ~~General~~S&P ~~Information~~and Moody’s re-affirmed the long-term credit ratings of CLP Power Hong Kong at “A+” and “Aa3” with stable outlook in June and July 2006 respectively.

~~The~~S&P ~~Company,~~also ~~CLP~~re-affirmed ~~Holdings Limited, and its subsidiaries are collectively referred to as~~ the ~~Group~~long-term incredit ~~the~~ratings ~~condensed consolidated interim accounts whilst its jointly controlled entities and associated companies are collectively referred to as affiliated companies. The principal activity~~ of ~~the~~CLP ~~Company is investment holding whilst the principal activities of the subsidiaries are the generation and supply of electricity in Hong Kong,~~ Australia ~~and~~Holdings ~~India,~~Pty ~~and~~Ltd ~~investment~~at ~~holding~~“A-” ofwith ~~power~~stable ~~projects~~ outlook in ~~the~~June ~~Chinese mainland, Southeast Asia and Taiwan~~2006.

The ~~financial~~Group’s investments and operations ofhave ~~the~~resulted ~~Company’s~~in ~~major~~exposures ~~subsidiary~~to foreign currency risks, ~~CLP~~interest ~~Power~~rate ~~Hong~~risks, ~~Kong~~credit ~~Limited~~risks ~~(CLP~~and ~~Power~~price ~~Hong~~risks ~~Kong),~~associated ~~and~~with ~~its~~the ~~jointly~~sales ~~controlled~~and ~~entity,~~purchases ~~Castle~~of ~~Peak~~electricity ~~Power~~in ~~Company~~Australia. ~~Limited~~We ~~(CAPCO),~~actively ~~are~~manage ~~governed~~such risks by ausing ~~Scheme~~different ofderivative ~~Control~~financial ~~(SoC)~~instruments ~~Agreement~~with ~~entered~~an ~~into~~objective ~~with~~to minimising the ~~Hong~~impact ~~Kong~~of ~~Government.~~exchange ~~Our~~rate, interest rate and electricity ~~business~~price influctuations ~~Hong~~on ~~Kong~~earnings, isreserves ~~therefore~~and ~~also referred~~tariff charges to ascustomers ~~the~~and ~~SoC~~shareholders. ~~business~~Other than certain electricity trading activities engaged by CLP Australia Holdings, all derivative financial instruments are employed solely for hedging purposes.

The ~~current~~fair ~~SoC~~value ~~Agreement will expire on 30 September 2008. The Hong Kong Government is in the process~~ of ~~formulating a framework for~~ the ~~post-2008~~Group’s ~~regulatory~~outstanding ~~regime.~~derivative ~~The~~financial ~~final~~instruments ~~post-2008~~as ~~regulatory~~at ~~framework~~31 December ~~will~~2006 bewas ~~subject~~a todeficit ~~negotiation~~of ~~and~~HK$464 million, ~~agreement~~which ~~between~~represents ~~CLP Power Hong Kong and~~ the ~~Government.~~net ~~The~~amount ~~Group~~we ~~considers~~would ~~that~~pay ~~there~~if ~~will~~these ~~not~~contracts ~~be any~~were ~~impairment~~closed toout ~~the~~at ~~fixed~~31 December ~~and other assets recognised under the existing SoC~~2006.

~~The~~As ~~condensed~~at ~~consolidated~~31 December ~~interim~~2006, ~~accounts~~we ~~have been~~had ~~approved~~gross ~~for~~outstanding ~~issue~~derivative byfinancial ~~the~~instruments ~~Board~~amounting ofto ~~Directors~~HK$76.4 ~~on 15 August 2006~~billion.

2.CORPORATE ~~Basis~~GOVERNANCE ~~of Preparation and Changes in Accounting Policies~~

~~The~~Since ~~unaudited~~February ~~condensed~~2005, ~~consolidated~~the ~~interim~~Company ~~accounts~~has ~~have~~adopted ~~been~~its ~~prepared~~own Code on Corporate Governance (the CLP Code) which incorporates all of the Code Provisions and Recommended Best Practices in ~~accordance~~the ~~with~~Stock ~~Hong~~Exchange’s ~~Kong~~Code ~~Accounting~~on ~~Standard~~Corporate Governance Practices (~~HKAS~~the Stock Exchange Code), 34save ~~“Interim~~for ~~Financial~~the ~~Reporting”~~single ~~issued~~exception byregarding ~~the~~quarterly ~~Hong~~financial ~~Kong~~results ~~Institute~~which is specified and explained in our Corporate Governance Report, as part of ~~Certified~~our ~~Public~~Annual ~~Accountants~~Report. CLP has also applied all of the principles in the Stock Exchange Code. The manner in which this has been done is set out in the CLP Code and the Corporate Governance Report.

~~The~~In ~~accounting~~2006, ~~policies~~we ~~used~~made further progress in the ~~preparation~~evolution of ~~this~~our ~~condensed~~corporate ~~consolidated~~governance ~~interim~~practices, ~~accounts~~in ~~are~~line ~~consistent~~ with ~~those~~the ~~set~~CLP ~~out~~Code inand ~~the Annual~~emerging ~~Report~~developments ~~2005,~~in ~~except~~global ~~for~~corporate governance ~~the~~practices. ~~adoption~~Details of the ~~new~~continuing ~~Hong~~evolution ~~Kong~~of ~~Financial~~our ~~Reporting~~corporate ~~Standards~~governance ~~(HKFRS)-Interpretation~~practices 4are ~~“Determining~~set ~~whether~~out anin ~~Arrangement~~the ~~contains~~Corporate aGovernance ~~Lease”, which is effective for accounting periods commencing on or after 1 January 2006~~Report.

~~The adoption of HKFRS-Interpretation 4 in 2006 has impacted the accounting for a number of contractual arrangements on electricity supply and power purchase that the Group~~CLP’s ~~affiliates~~only ~~have~~deviation ~~entered~~from ~~into.~~the ~~After~~Recommended ~~assessment~~Best ofPractices ~~these~~relating ~~arrangements, some of them have been determined~~ to ~~contain~~the ~~terms~~recommendation that ~~should~~an beissuer ~~accounted for as finance leases in accordance with~~should ~~HKAS~~announce 17and ~~“Leases”.~~publish ~~One~~quarterly ~~subsidiary~~financial ~~which~~results ~~was~~remains ~~previously accounted for~~ as a ~~purchaser~~deviation of ~~electricity~~the ~~has~~CLP ~~become~~Code ~~a lessee,~~ and ~~another~~our ~~subsidiary,~~actual ~~together~~practices ~~with~~from athe ~~number~~Stock ofExchange ~~joint~~Code. ~~ventures,~~The ~~which~~reason ~~were~~is ~~previously~~a ~~accounted~~judgment ~~for~~that, as ~~electricity sellers have become lessors. For finance lease accounting,~~ a ~~lessee~~matter ~~has~~of toprinciple ~~capitalise the leased assets in its books~~ and atpractice, ~~the~~quarterly ~~same~~reporting ~~time~~does ~~recognise~~not ~~its~~bring significant ~~obligations~~benefits atto ~~amounts~~shareholders. ~~equal~~CLP’s toposition ~~the~~is ~~fair~~set ~~value~~out ofon ~~the~~our ~~leased~~website. ~~assets~~We ordo, ~~if lower~~however, ~~the~~issue ~~present value~~quarterly ofstatements ~~future~~which ~~minimum~~include ~~lease payments. For a lessor under a finance lease~~revenue, ~~leased~~interim ~~assets~~dividends ~~are~~and ~~recognised~~progress ~~as lease receivables at an amount equal to the net investment~~ in ~~the~~major ~~lease~~business activities.

~~Set~~Throughout ~~out~~the ~~below~~year, isthe Company met the ~~effect~~Code Provisions as set out in the Stock Exchange Code contained in Appendix 14 of ~~adopting~~the ~~this~~Rules ~~new~~Governing ~~interpretation~~the Listing of Securities on the ~~prior~~Stock ~~year’s~~Exchange ~~financial~~of ~~results~~Hong ~~and position~~Kong.

~~Page~~The 37Audit Committee has reviewed the accounting principles and practices adopted by the Group and the financial statements for the year ended 31 December 2006. It has also reviewed the findings and opinion of Group Internal Audit and Management on the effectiveness of the Company’s system of internal control. All of the Audit Committee members are appointed from the Independent Non-executive Directors, with the Chairman and a member having appropriate professional qualifications and experience in financial matters.

~~Table~~Since 1989, the Company has adopted its own Code for Securities Transactions by Directors (CLP Securities Code), which is largely based on the Model Code set out in Appendix 10 of ~~Contents~~the Listing Rules. The CLP Securities Code also applies to Senior Management (comprising the two Executive Directors and seven other members, whose biographies are set out in the Annual Report and CLP’s website, and other “Specified Individuals” such as senior managers in the CLP Group. The CLP Securities Code has been updated from time to time to reflect new regulatory requirements as well as CLP Holdings’ strengthened regime of disclosure of interests in its securities.

2.The ~~Basis~~current ofCLP ~~Preparation~~Securities ~~and~~Code ~~Changes~~is on terms no less exacting than the required standard set out in ~~Accounting~~the ~~Policies~~Model ~~(continued)~~Code.

~~The~~All ~~2005~~Directors ~~comparatives~~have ~~(originally~~confirmed, ~~shown~~following inspecific enquiry by the ~~Consolidated~~Company, ~~Profit~~that ~~and~~they ~~Loss~~have ~~Account~~complied ~~for~~with the ~~six~~required ~~months~~standard ~~ended~~set ~~30 June~~out ~~2005~~in ~~published~~the onModel ~~23 August~~Code ~~2005~~ and ~~the~~CLP ~~Consolidated~~Securities Code ~~Balance~~throughout ~~Sheet~~the asperiod atfrom 311 ~~December 2005~~January ~~published~~to ~~on 28~~31 ~~February~~December 2006). ~~have been amended as a result of:~~

~~i) the adoption of the new HKFRS-Interpretation 4~~PURCHASE, inSALE ~~accordance~~OR ~~with~~REDEMPTION ~~the~~OF ~~transitional~~THE ~~provisions~~COMPANY’S ~~specified~~LISTED ~~therein; and~~SHARES

~~ii)~~There ~~the~~was ~~adjustment~~no ~~to the~~ purchase, ~~consideration~~sale ~~and~~or ~~the~~redemption ~~valuation~~ of ~~intangible~~the ~~assets~~Company’s ~~relating~~listed toshares ~~the~~by ~~acquisition of~~ the ~~merchant~~Company ~~energy~~or ~~business~~any ~~division~~of ~~(MEB)~~its ofsubsidiaries ~~SPI~~during ~~Australia~~the ~~Group~~year inended 31 December ~~2005~~2006.

Consolidated Profit and Loss Account (for 6 months to 30 June 2005)	As previouslystated HK$M		Adjustments tocomparatives		RestatedHK$M
			LeaseaccountingHK$M
Revenue	16,626		(265	)	16,361
Expenses
Purchase of electricity, gas and distribution services	(8,613	)	2,160		(6,453	)
Staff expenses	(665	)	—		(665	)
Fuel and other operating costs	(1,976	)	(13	)	(1,989	)
Depreciation and amortisation	(1,359	)	(708	)	(2,067	)
	(12,613	)	1,439		(11,174	)
Operating profit	4,013		1,174		5,187
Finance costs	(725	)	(1,347	)	(2,072	)
Finance income	63		188		251
Share of results, net of tax
jointly controlled entities	1,614		50		1,664
associated companies	79		(28	)	51
Profit before taxation	5,044		37		5,081
Taxation	(467	)	(3	)	(470	)
Earnings attributable to shareholders	4,577		34		4,611

FINAL DIVIDENDS

~~Page~~The 38final dividend of HK$0.89 per share and the special final dividend (out of Hok Un redevelopment profit) of HK$0.02 per share (2005: ordinary final dividend of HK$0.83 per share and special final dividend of HK$0.11 per share) will be payable on all shares of HK$5.00 each in issue as at 13 April 2007 after deducting any shares repurchased and cancelled up to 13 April 2007. As at 31 December 2006, 2,408,245,900 shares of HK$5.00 each were in issue. If approved, the final dividend and the special final dividend totalling HK$0.91 per share will be payable on 25 April 2007 to shareholders registered as at 24 April 2007.

~~Table~~The Register of ~~Contents~~Shareholders will be closed from 16 April 2007 to 24 April 2007, both days inclusive. To rank for the final dividend and special final dividend, all transfers should be lodged with the Company’s Registrars, Computershare Hong Kong Investor Services Limited, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong, for registration not later than 4:30 p.m. on Friday, 13 April 2007.

2.ANNUAL ~~Basis~~GENERAL ofMEETING ~~Preparation and Changes in Accounting Policies (continued)~~

Consolidated Balance Sheet (as at 31 December 2005)			Adjustments to comparatives
	As previouslystated		Leaseaccounting		Purchase(a)consideration		Restated
	HK$M		HK$M		HK$M		HK$M
Non-current assets
Fixed assets	60,815		18,703		—		79,518
Leasehold land and land use rights	2,234		(1	)	—		2,233
Goodwill and other intangible assets (Note 15)	7,949		—		(1,019	)	6,930
Interests in jointly controlled entities	16,519		142		—		16,661
Interests in associated companies	1,641		56		—		1,697
Finance lease receivables	—		2,652		—		2,652
Deferred tax assets	2,537		—		—		2,537
Derivative instruments	260		—		—		260
Other non-current assets	506		—		—		506
	92,461		21,552		(1,019	)	112,994
Current assets
Inventories – stores and fuel	596		—		—		596
Trade and other receivables	5,505		—		1,019		6,524
Finance lease receivables	—		165		—		165
Derivative instruments	1,302		—		—		1,302
Bank balances, cash and other liquid funds	2,041		—		—		2,041
	9,444		165		1,019		10,628
Current liabilities
Customers’ deposits	(3,308	)	—		—		(3,308	)
Trade and other payables	(6,079	)	—		—		(6,079	)
Taxation payable	(376	)	—		—		(376	)
Bank loans and other borrowings	(3,508	)	—		—		(3,508	)
Obligations under finance leases	—		(1,803	)	—		(1,803	)
Derivative instruments	(1,134	)	—		—		(1,134	)
	(14,405	)	(1,803	)	—		(16,208	)
Net current (liabilities)/assets	(4,961	)	(1,638	)	1,019		(5,580	)
Total assets less current liabilities	87,500		19,914		—		107,414
Financed by:
Equity
Share capital	12,041		—		—		12,041
Share premium	1,164		—		—		1,164
Reserves
Proposed dividends	2,264		—		—		2,264
Others	34,690		126		—		34,816
Shareholders’ funds	50,159		126		—		50,285
Minority interest	111		—		—		111
	50,270		126		—		50,396
Non-current liabilities
Bank loans and other borrowings	25,883		—		—		25,883
Obligations under finance leases	—		19,694		—		19,694
Deferred tax liabilities	5,472		107		—		5,579
Derivative instruments	444		—		—		444
Fuel clause account	323		—		—		323
SoC reserve accounts	4,174		—		—		4,174
Other non-current liabilities	934		(13	)	—		921
	37,230		19,788		—		57,018
Equity and non-current liabilities	87,500		19,914		—		107,414

The ninth Annual General Meeting (AGM) will be held at Jockey Club Auditorium, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong on Tuesday, 24 April 2007, at 11:00 a.m. The Notice of AGM will be published in the South China Morning Post and Hong Kong Economic Times and despatched to Shareholders on or about 30 March 2007.

~~Note~~By ~~(a):~~Order ~~The acquisition~~ of the ~~MEB~~Board ~~from an affiliate of Singapore Power Limited occurred in May 2005. A claim was lodged with this affiliated company prior to the end of 2005. Settlement was reached in~~ April ~~2006,~~Chan ~~resulting~~Company ~~in a reduction in the purchase consideration which has been reflected as a reduction in goodwill.~~Secretary

~~Page~~Hong 39Kong, 28 February 2007

~~Table~~The ofCompany’s ~~Contents~~Annual Report containing the Directors’ Report and Financial Statements

3.for ~~Purchase~~the ofyear ~~Electricity,~~ended ~~Gas~~31 December ~~and~~2006 ~~Distribution~~will ~~Services~~be published on the Company’s website at

~~These~~www.clpgroup.com ~~expenses~~and ~~are~~the ~~made~~website upof the Stock Exchange of: Hong Kong

	6 months ended 30 June
	2006HK$M	2005 HK$M
Purchase of electricity, gas and distribution services	5,892	2,961
Lease and service charges	3,691	3,492
	9,583	6,453

on or about 14 March 2007. The Annual Report, the CLP Group Social and Environmental

~~Following~~Report ~~the~~and ~~adoption of lease accounting by~~ the ~~Group,~~Notice ~~certain elements~~ of ~~the~~Annual ~~payments~~General byMeeting ~~CLP Power~~will ~~Hong~~be ~~Kong~~despatched to ~~CAPCO under the electricity supply contract have now been accounted for as lease and service payments.~~

4.shareholders ~~Formation~~on ofor ~~OneEnergy~~about 30 March 2007.

OnAll ~~22 March 2006, the Group and Mitsubishi Corporation~~ of ~~Japan~~these ~~formed~~will abe ~~jointly~~made ~~controlled~~available ~~entity~~on ~~called OneEnergy Limited (OneEnergy) for~~ the ~~purpose of acquiring interests in and developing and operating power generation businesses in Southeast Asia and Taiwan. The Group~~Company’s ~~interest of 22~~website.4% ~~in Electricity Generating Public Company Limited (EGCO) of Thailand was injected into OneEnergy. The gain arising from the formation of OneEnergy amounted to HK$291 million.~~

5.CLP ~~Revenue~~Holdings Limited

~~An analysis of the Group’s revenue~~(incorporated ~~for~~in ~~the~~Hong ~~period~~Kong iswith aslimited ~~follows:~~liability)

	6 months ended 30 June
	2006 HK$M	2005 HK$M
Sales of electricity	18,590	14,908
Lease and service charges received	778	669
Sales of gas	1,379	313
Other revenue	177	133
	20,924	16,023
Transfer from Development Fund (A)	488	338
	21,412	16,361

(Stock Code: 002)

~~(A)~~Non-executive ~~Pursuant~~Directors: toThe ~~the~~Hon. ~~SoC~~Sir ~~Agreement~~Michael Kadoorie, ifMr. ~~the~~W. ~~gross~~E. ~~tariff~~Mocatta, ~~revenue~~Mr. inJ. ~~Hong~~S. ~~Kong~~Dickson inLeach, ~~any~~Mr. ~~year~~R. ~~exceeds~~J. orMcAulay, isMr. ~~less~~J. ~~than~~A. ~~the~~H. ~~total~~Leigh, ofMr. ~~the~~R. ~~operating~~Bischof, ~~costs~~Mr. I. D. Boyce, ~~permitted~~Mr. ~~return~~P. C. Tan (Mr. Bradley W. Corson as his alternate), Mr. Jason Whittle and ~~taxation~~Dr. ~~charges~~Y. B. Lee Independent Non-executive Directors: The Hon. Sir S. Y. Chung, ~~such~~Dr. ~~excess~~William ~~shall~~K. beFung, ~~added~~Mr. toV. F. Moore, orMr. ~~such~~Hansen ~~deficiency~~C. ~~shall~~H. beLoh, ~~deducted~~Mr. ~~from~~Paul M. L. Kan, ~~the~~Professor ~~Development~~Judy ~~Fund~~Tsui ~~(Note~~and ~~26)~~Sir Rod Eddington Executive Directors: Mr. Andrew Brandler and Mr. Peter P. W. Tse

~~Page~~Exhibit 403

LOGO

~~Table~~The Stock Exchange of ~~Contents~~Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

6. DISCLOSEABLE ~~Segment~~TRANSACTIONS ~~Information~~

~~The~~On ~~Group~~9 ~~operates~~March 2007, ~~through its~~the ~~subsidiaries~~CLP Group, ~~jointly~~Mitsubishi ~~controlled~~and ~~entities~~OneEnergy entered into a sale and ~~associated~~purchase ~~companies,~~agreement inwhereby ~~four~~the ~~major~~CLP ~~geographical~~Group ~~regions~~agreed to inject the Ho-Ping ~~Hong~~Project ~~Kong,~~Interests ~~Australia~~into OneEnergy. The consideration for the Ho-Ping Injection, if aggregated with the ~~Chinese~~considerations ~~mainland~~for the CLP Thailand Injection and ~~other~~the ~~countries~~BLCP Injection, will result in ~~Asia~~the application percentage ratios set out in Rule 14.07 ~~Information~~of ~~about~~the Listing Rules exceeding 5%. Accordingly, on an aggregated basis, the ~~Group’s~~Asset ~~operations~~Injections bywill ~~geographical~~constitute ~~region is~~discloseable transactions for the Company under Chapter 14 of the Listing Rules. A circular containing further information on the Asset Injections will be sent to shareholders as ~~follows:~~soon as practicable.

	Hong Kong	Australia	Chinese Mainland		OtherCountries in Asia	Unallocated Items		Total
	HK$M	HK$M	HK$M		HK$M	HK$M		HK$M
6 months ended 30 June 2006
Revenue	14,061	6,502	49		799	1		21,412
Segment results	5,227	621	(21	)	517	(83	)	6,261
Share of results, net of tax
jointly controlled entities	791	5	501	(a)	65	—		1,362
associated companies	—	2	—		110	—		112
Profit/(Loss) before financing and taxation	6,018	628	480		692	(83	)	7,735
Finance costs								(2,419	)
Finance income								242
Taxation								(575	)
Minority interest								(8	)
Earnings for the period								4,975
Capital additions	4,855	422	2		4	1		5,284
Depreciation and amortisation	1,976	429	18		3	1		2,427
As at 30 June 2006
Segment assets	5,418	10,878	307		6,085	80		22,768
Owned and leased assets	67,394	14,413	653		24	8		82,492
Interests in
jointly controlled entities	7,228	1,117	6,630		3,824	—		18,799
associated companies	—	7	—		—	—		7
Tax assets	—	2,421	40		—	—		2,461
Consolidated total assets	80,040	28,836	7,630		9,933	88		126,527
Segment liabilities	10,432	4,358	83		109	82		15,064
Obligation under finance leases	23,468	14	—		—	—		23,482
Bank loans and other borrowings	12,319	9,678	225		1,265	6,095		29,582
Tax liabilities	5,686	137	23		448	—		6,294
Consolidated total liabilities	51,905	14,187	331		1,822	6,177		74,422

INTRODUCTION

~~Note~~As ~~(a):~~disclosed ~~Out~~in of the ~~HK$501~~Company’s ~~million~~announcement dated 22 March 2006, ~~HK$347~~the ~~million~~CLP ~~was~~Group ~~attributed~~and Mitsubishi agreed to ~~investments~~form a strategic joint venture for the purpose of acquiring interests in ~~Guangdong~~and ~~Nuclear~~developing ~~Power~~and ~~Joint~~operating ~~Venture~~power ~~Company,~~generation businesses ~~Limited~~in ~~(GNPJVC)~~Southeast Asia and ~~Hong~~Taiwan. ~~Kong~~The ~~Pumped~~joint ~~Storage~~venture ~~Development~~vehicle ~~Company,~~is ~~Limited~~called ~~(PSDC)~~OneEnergy, ~~whose~~which ~~generating~~is ~~facilities~~owned ~~serve~~by ~~Hong~~the ~~Kong~~CLP Group and Mitsubishi on a 50:50 basis since the formation of the joint venture.

~~Page~~The 41CLP Group injected its interests in CLP Thailand (which owns approximately 22.42% of EGCO) into OneEnergy upon the formation of the OneEnergy joint venture. Subsequently, the CLP Group also injected its interest in BLCP into EGCO. On 9 March 2007, the CLP Group, Mitsubishi and OneEnergy entered into a sale and purchase agreement whereby the CLP Group agreed to inject the Ho-Ping Project Interests into OneEnergy.

~~Table~~1 ~~of Contents~~

6.CLP ~~Segment~~THAILAND ~~Information~~INJECTION ~~(continued)~~

(Restated)	Hong KongHK$M	AustraliaHK$M	Chinese MainlandHK$M		OtherCountries in AsiaHK$M		Unallocated ItemsHK$M		TotalHK$M
6 months ended 30 June 2005
Revenue	13,704	1,968	—		689		—		16,361
Segment results	4,919	445	(37	)	(66	)	(74	)	5,187
Share of results, net of tax
jointly controlled entities	931	—	563	(a)	170		—		1,664
associated companies	—	—	—		51		—		51
Profit/(Loss) before financing and taxation	5,850	445	526		155		(74	)	6,902
Finance costs									(2,072	)
Finance income									251
Taxation									(470	)
Earnings for the period									4,611
Capital additions	5,088	261	—		6		—		5,355
Depreciation and amortisation	1,793	269	1		3		1		2,067
As at 31 December 2005
Segment assets	5,013	12,374	255		5,492		75		23,209
Owned and leased assets	64,621	14,196	661		32		8		79,518
Interests in
jointly controlled entities	7,092	1,093	6,888		1,588		—		16,661
associated companies	—	5	—		1,692		—		1,697
Tax assets	—	2,504	33		—		—		2,537
Consolidated total assets	76,726	30,172	7,837		8,804		83		123,622
Segment liabilities	11,287	4,271	150		598		77		16,383
Obligation under finance leases	21,484	13	—		—		—		21,497
Bank loans and other borrowings	11,528	11,108	228		1,236		5,291		29,391
Tax liabilities	5,466	133	27		329		—		5,955
Consolidated total liabilities	49,765	15,525	405		2,163		5,368		73,226

On 22 March 2006, the CLP Group, Mitsubishi and OneEnergy entered into a subscription agreement in relation to the formation of the OneEnergy joint venture. Prior to the entering into of the subscription agreement, OneEnergy was then a wholly-owned subsidiary of the CLP Group.

~~Note~~The ~~(a):~~formation ~~Out~~ of the ~~HK$563~~joint ~~million,~~venture ~~HK$431 million~~ was ~~attributed~~implemented toby: ~~investments in GNPJVC and PSDC, whose generating facilities serve Hong Kong.~~

No(a) ~~business~~the ~~analysis~~CLP isGroup ~~shown~~procuring ~~as substantially all~~ the ~~principal~~transfer ~~activities~~ of the ~~Group~~entire ~~are~~issued ~~for the~~share ~~generation~~capital ~~and supply~~ of ~~electricity.~~CLP ~~The~~Thailand ~~SoC~~to ~~business~~OneEnergy ~~accounted~~and ~~for~~discharging ~~approximately~~any ~~100%~~loan ofmade ~~the~~to ~~Group’s~~CLP ~~revenue~~Thailand ~~and~~by ~~segment~~any ~~results~~other incompany ~~Hong~~within ~~Kong for~~ the ~~period~~CLP ~~ended~~Group; ~~30 June 2006.~~ and

~~Page~~(b) 42Mitsubishi subscribing new shares in OneEnergy representing 50% of the issued share capital of OneEnergy (on a fully-diluted basis) at the consideration of approximately US$335 million (HK$2,613 million) which was paid upon completion.

~~Table~~Upon completion of ~~Contents~~the subscription which took place on 23 March 2006, OneEnergy became a jointly controlled entity of the CLP Group as it was owned by the CLP Group and Mitsubishi on a 50:50 basis and CLP Thailand became a wholly-owned subsidiary of OneEnergy. The CLP Group, Mitsubishi and OneEnergy also entered into a shareholders’ agreement to regulate the management and business activities of the joint venture.

7CLP Thailand is an investment holding company, owning approximately 22.42% ~~Operating~~of ~~Profit~~the issued shares of EGCO. For the financial year ended 31 December 2005, the audited net profits (before and after taxation and extraordinary items) of CLP Thailand were HK$68 million and HK$61 million, respectively. For the financial year ended 31 December 2004, the audited net profits (before and after taxation and extraordinary items) of CLP Thailand were HK$67 million and HK$60 million, respectively. As at 31 December 2005, CLP Thailand had audited total assets of HK$1,234 million.

~~Operating~~For ~~profit~~the isfinancial ~~stated~~year ended 31 December 2005, the audited net profits (before and after ~~charging/~~taxation and extraordinary items) of EGCO were 4,568 million Baht (~~crediting~~HK$880 million) and 4,093 million Baht (HK$789 million), respectively. For the ~~following:~~financial year ended 31 December 2004, the audited net profits (before and after taxation and extraordinary items) of EGCO were 5,258 million Baht (HK$1,017 million) and 4,662 million Baht (HK$902 million), respectively. As at 31 December 2005, EGCO had audited total assets of 61,250 million Baht (HK$11,552 million). The figures above are extracted from the audited financial statements of EGCO, which were prepared in accordance with generally accepted accounting principles in Thailand.

	6 months ended 30 June
	2006HK$M		2005 HK$M
Charging
Staff costs (A)
Salaries and other costs	1,039		800
Retirement benefits costs	91		68
Lease and service charges from CAPCO	3,691		3,492
Lease expenditure for long-term hedge agreement with Ecogen	105		—
Net loss on disposal of fixed assets	8		33
Other net fair value losses/(gains) on derivative instruments
Transactions not qualifying as hedges	80		(7	)
Other net exchange losses	—		24
Crediting
Other net fair value gains on derivative instruments
Cash flow hedges, transfer from equity	(44	)	(68	)
Lease and service charges received	(778	)	(669	)
Net rental income from properties	(6	)	(7	)
One-off gain on formation of OneEnergy	(291	)	—

Under Rule 14.29 of the Listing Rules, the allotment of shares in OneEnergy to Mitsubishi was regarded as a “deemed disposal” of CLP Group’s interest in CLP Thailand. The CLP Group has recognised a gain of HK$343 million arising from the formation of the OneEnergy joint venture.

~~(A)~~BLCP ~~Staff~~INJECTION ~~costs include amounts recharged to jointly controlled entities for services provided.~~

8On 30 October 2006, the CLP Group and EGCO entered into a share purchase agreement whereby the CLP Group agreed to sell its entire 50% equity interest in BLCP to EGCO. ~~Finance~~The ~~Costs~~consideration was in the aggregate sum of 6,645 million Baht (HK$1,424 million), of which (a) 2,000 million Baht (HK$424 million) was paid on 6 November 2006 to cover the new shares in BLCP subscribed by the CLP Group before completion; and ~~Income~~(b) 4,645 million Baht (HK$1,000 million) was paid upon completion of the share transfer which took place on 30 January 2007.

	6 months ended 30 June
	2006HK$M		2005 HK$M
Finance costs:
Interest expenses on
bank loans and overdrafts	458		341
other borrowings
- wholly repayable within five years	49		82
- not wholly repayable within five years	280		100
Development Fund and special provision account (A)	133		120
customers’ deposits and others	53		30
Subscription interest on outstanding purchase consideration on renewable projects	19		—
Finance charges under finance leases	1,533		1,360
Other finance charges	27		20
Fair value losses on derivative instruments
Cash flow hedges, transfer from equity	1		174
Transactions not qualifying as hedges	2		—
Hedging costs and exchange losses/(gains)	4		(2	)
	2,559		2,225
Less: amount capitalised	(140	)	(153	)
	2,419		2,072
Finance income:
Interest income on
short-term investments and bank deposits	69		62
advance to a jointly controlled entity	1		1
Finance income under finance leases	172		188
	242		251

~~(A)~~BLCP Inis ~~accordance with~~ the ~~provisions~~owner of ~~the~~a ~~SoC~~1,434MW ~~Agreement~~coal-fired power station in Rayong, ~~CLP~~Thailand, ~~Power~~which ~~Hong~~was ~~Kong~~under construction till late 2006 and is ~~required~~now toin ~~credit,~~full tocommercial aoperation. ~~Rate~~For ~~Reduction~~the ~~Reserve~~financial inyear ~~its~~ended ~~accounts~~31 December 2005, athe ~~charge~~audited ofnet 8%losses ~~per~~(both ~~annum~~before onand ~~the~~after ~~sum~~taxation and extraordinary items) of BLCP were 269 million Baht (HK$52 million). For the ~~average~~financial ~~balances~~year ended of31 December 2004, the ~~Development~~audited ~~Fund~~net losses (both before and ~~special~~after ~~provision~~taxation ~~account~~and extraordinary items) of BLCP were 99 million Baht (~~Note~~HK$19 26million). As at 31 December 2005, BLCP had audited total assets of 18,992 million Baht (HK$3,582 million). The figures above are extracted from the audited financial statements of BLCP, which were prepared in accordance with generally accepted accounting principles in Thailand.

~~Page~~The 43CLP Group has recognised a gain of HK$888 million as a result of the BLCP Injection.

~~Table~~HO-PING ofINJECTION ~~Contents~~

On 9. March ~~Share~~2007, ofthe ~~Results~~CLP ofGroup, ~~Affiliated~~Mitsubishi ~~Companies~~and OneEnergy entered into a sale and purchase agreement whereby the CLP Group agreed to inject the Ho-Ping Project Interests into OneEnergy.

~~Affiliated~~Ho-Ping ~~companies~~owns ~~include~~a ~~the~~1,320MW ~~Group’s~~coal-fired ~~jointly~~power ~~controlled~~station ~~entities~~at Ho Ping, Taiwan. Ho-Ping was originally a joint venture between the CLP Group and ~~associated~~TCC, ~~companies.~~with ~~The~~CLP ~~share~~P-SEA of(a ~~results~~wholly-owned subsidiary of ~~affiliated~~the ~~companies~~CLP isGroup) ~~determined~~indirectly ~~based~~owning ~~upon~~40% of the ~~management~~issued ~~accounts~~share capital of Ho-Ping and TCC owning the ~~respective~~remaining ~~affiliated~~60%. ~~companies,~~HPSC ~~after~~principally ~~making~~provides ~~adjustments~~operation toand ~~conform~~maintenance ~~with~~services to the ~~Group’s~~power ~~significant~~station ~~accounting~~of ~~policies,~~Ho-Ping. ~~for~~Upon completion of the ~~period~~Ho-Ping ~~ended~~Injection, 30CLP ~~June.~~P-SEA will become a wholly-owned subsidiary of OneEnergy and will therefore cease to be a subsidiary of the CLP Group.

10The consideration for the Ho-Ping Injection amounts to US$500 million (HK$3,900 million) which will be satisfied (a) as to US$410 million (HK$3,198 million) in cash payable by OneEnergy to the CLP Group before completion; and (b) as to US$90 million (HK$702 million) by issuing and allotting 9,000 new shares in OneEnergy to the CLP Group at completion. ~~Taxation~~Part of the cash consideration mentioned in (a) above, being in the amount of US$90 million (HK$702 million), will be funded by issuing and allotting the same number of new shares in OneEnergy to Mitsubishi at completion. Upon completion of the Ho-Ping Injection and the issue of new shares in OneEnergy to the CLP Group and Mitsubishi as set out above, OneEnergy will remain a 50:50 joint venture between the CLP Group and Mitsubishi.

~~Taxation~~Completion inof the ~~condensed~~Ho-Ping ~~consolidated income~~Injection ~~statement~~is ~~represents~~conditional ~~the~~upon ~~taxation~~fulfilment of all the ~~Company~~conditions ~~and~~set ~~subsidiaries~~out in the sale and purchase agreement, including the obtaining of third party consents. Completion is ~~analysed~~expected ~~below:~~to take place on 30 March 2007, or such later date as the CLP Group and Mitsubishi shall agree.

	6 months ended 30 June
	2006HK$M	2005 HK$M
Current income tax
Hong Kong	346	418
Outside Hong Kong	32	14
	378	432
Deferred income tax
Hong Kong	130	125
Outside Hong Kong	67	(87	)
	197	38
	575	470

For the financial year ended 31 December 2006, the audited net profits (both before and after taxation and extraordinary items) of CLP P-SEA were US$12 million (HK$94 million). For the financial year ended 31 December 2005, the audited net profits (both before and after taxation and extraordinary items) of CLP P-SEA were US$6 million (HK$47 million). As at 31 December 2006, CLP P-SEA had audited total assets of US$134 million (HK$1,045 million).

~~Hong~~For ~~Kong~~the financial year ended 31 December 2006, the audited net profits ~~tax~~(before ~~has~~and ~~been~~after ~~provided~~taxation atand ~~the~~extraordinary ~~rate~~items) of ~~17.5%~~HPSC were NT$164 million (~~2005:~~HK$39 million) ~~17.5%~~and NT$123 million (HK$29 million), onrespectively. For the ~~estimated assessable~~financial ~~profits~~year ~~for~~ended ~~the~~31 December ~~period.~~2005, ~~Taxation~~the onaudited net profits ~~assessable~~(before ~~outside~~and ~~Hong~~after ~~Kong~~taxation ~~has~~and ~~been~~extraordinary ~~provided~~items) of HPSC were NT$160 million (HK$39 million) and NT$120 million (HK$29 million), respectively. As at 31 December 2006, HPSC had audited total assets of NT$185 million (HK$44 million). The figures above are extracted from the ~~rates~~audited ~~prevailing~~financial statements of HPSC, which were prepared in ~~the~~accordance ~~respective~~with generally ~~jurisdictions~~accepted accounting principles in Taiwan.

~~11.~~3 ~~Earnings Attributable to Shareholders~~

The ~~following~~ ~~analysis~~consideration offor ~~earnings~~the Ho-Ping Injection is ~~outside~~expected to exceed the ~~requirements~~book value of ~~HKFRSs~~the ~~and~~Ho-Ping Project Interests. The CLP Group is ~~included~~therefore expected to ~~give~~recognise ~~further~~a ~~information~~one-off gain in its consolidated income statement upon completion, which is estimated to ~~investors~~be onaround HK$1,000 million. The cash proceeds to be received by the ~~source~~CLP Group in the amount of ~~Group~~US$410 ~~earnings:~~million (HK$3,198 million) as a result of the Ho-Ping Injection are expected to be used as general working capital of the CLP Group.

	6 months ended 30 June
	2006				2005
	HK$M		HK$M		HK$M		HK$M
Electricity business in Hong Kong			3,573				3,510
Electricity sales to Chinese mainland from Hong Kong	55				63
Generating facilities in Chinese mainland serving Hong Kong (GNPJVC and PSDC)	347				431
Other power projects in Chinese mainland	106				95
Energy business in Australia	287				(8	)
Electricity business in India	371				279
Power projects in Southeast Asia and Taiwan	142				185
Renewable energy business	(25	)			4
Other businesses	(6	)			(5	)
One-off gain on formation of OneEnergy	291				—
Earnings from other activities			1,568				1,044
Unallocated net finance costs			(122	)			(43	)
Unallocated Group expenses			(83	)			(74	)
Total operating earnings			4,936				4,437
Hok Un redevelopment profit			39				174
Earnings attributable to shareholders			4,975				4,611

REASONS FOR THE ASSET INJECTIONS

~~Page~~OneEnergy 44has been established as the exclusive power sector investment vehicle in Southeast Asia and Taiwan for its two shareholders. Since the formation of the joint venture, OneEnergy has been negotiating with its shareholders with a view to acquiring existing power generation projects or interests owned by its shareholders in stages. The CLP Thailand Injection and the Ho-Ping Injection are in line with the business strategies of the CLP Group and OneEnergy.

~~Table~~The considerations for the CLP Thailand Injection and the Ho-Ping Injection were agreed between the parties after arm’s length negotiations between the CLP Group and Mitsubishi, taking into account the cash flow and earnings of ~~Contents~~the assets injected, and the leverage on the combined expertise, capital and local networks of the Company and Mitsubishi.

12The BLCP Injection provides a means for the CLP Group to consolidate its existing investments in the Thailand power market in a single vehicle, namely EGCO. ~~Dividends~~The consideration for the BLCP Injection was agreed between the parties after arm’s length negotiations between the CLP Group and EGCO, taking into account the valuation of the assets injected and CLP Group’s strategic role in EGCO.

	6 months ended 30 June
	2006		2005
	HK$ per share	HK$M	HK$ per share	HK$M
First interim dividend paid	0.50	1,204	0.48	1,156
Second interim dividend proposed	0.50	1,204	0.48	1,156
	1.00	2,408	0.96	2,312

The Directors consider that the terms of the Asset Injections are fair and reasonable and in the interests of the shareholders as a whole.

AtGENERAL the Board meeting held on 15 August 2006, the Directors declared the second interim dividend of HK$0.50 per share. The second interim dividend is not reflected as a dividend payable in the accounts, but as a separate component of the shareholders’ funds for the period ended 30 June 2006.

13The consideration for the Ho-Ping Injection, if aggregated with the considerations for the CLP Thailand Injection and the BLCP Injection, will result in the application percentage ratios set out in Rule 14.07 ~~Earnings~~of ~~per~~the ~~Share~~Listing Rules exceeding 5%. Accordingly, on an aggregated basis, the Asset Injections will constitute discloseable transactions for the Company under Chapter 14 of the Listing Rules. A circular containing further information on the Asset Injections will be sent to shareholders as soon as practicable.

The ~~prescribed~~Company ~~earnings~~is ~~per~~the holding company of the CLP Group. The CLP Group owns and operates a vertically integrated electricity generation, ~~share~~transmission ~~includes~~and ~~Hok~~distribution Unbusiness ~~redevelopment~~in ~~profit~~Hong Kong, and isinvests ~~computed~~in asthe ~~follows:~~power sector in Australia, the Chinese mainland, India, Taiwan and Thailand.

	6 months ended 30 June
	2006	2005
Earnings for the period, HK$M	4,975	4,611
Weighted average number of shares in issue, thousand shares	2,408,246	2,408,246
Earnings per share, HK$	2.07	1.91

Mitsubishi is one of the largest Japanese trading companies doing business on a world-wide basis in, among others, automobile sales and manufacturing, electric appliances, steel and metal products, chemicals, processed foods, textiles, fuel imports and agriculture commodity exports.

ToEGCO ~~enable~~is ~~investors~~a toregional ~~understand~~power ~~better the Group’s results~~owner, anoperator ~~additional~~and ~~earnings~~developer ~~per~~listed ~~share figure,~~on ~~excluding~~ the ~~Hok~~Stock UnExchange ~~redevelopment~~of ~~profit,~~Thailand. ~~is provided below:~~

	6 months ended 30 June
	2006		2005
	HK$M		HK$M
Earnings for the period	4,975		4,611
Less: Hok Un redevelopment profit	(39	)	(174	)
Earnings excluding Hok Un redevelopment profit	4,936		4,437
Earnings per share excluding Hok Un redevelopment profit, HK$	2.05		1.84

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, Mitsubishi, EGCO and their ultimate beneficial owners are third parties independent of the Company and its connected persons (as defined in the Listing Rules).

~~Fully~~4 ~~diluted earnings per share is not included as the Company did not have any diluting equity instruments as at 30 June 2006 (2005: nil).~~

~~Page~~DEFINITIONS 45

~~Table~~Unless the ofcontext ~~Contents~~otherwise requires, terms used in this announcement shall have the following meanings:

14. Fixed Assets, Leasehold Land and Land Use Rights


“Asset Injections”		collectively, the CLP Thailand Injection, the BLCP Injection and the Ho-Ping Injection

“Baht”		Thai Baht

“BLCP”		BLCP Power Limited, a limited liability company incorporated in Thailand which owns a 1,434MW coal-fired power station in Rayong, Thailand

“BLCP Injection”		the sale of 50% interest in the registered share capital of BLCP by the CLP Group to EGCO, as detailed in the section headed “BLCP Injection” in this announcement

“CLP Group”		the Company and its subsidiaries

“CLP P-SEA”		CLP Power Southeast Asia Limited, a limited liability company incorporated in the British Virgin Islands which owns 40% of the issued share capital of Ho-Ping

“CLP Thailand”		CLP Power Projects (Thailand) Limited, a limited liability company incorporated in the British Virgin Islands which owns a 22.42% interest in the issued shares of EGCO

“CLP Thailand Injection”		the transfer of the entire issued share capital of CLP Thailand to OneEnergy and subscription by Mitsubishi of 50% of the issued share capital of OneEnergy (on a fully-diluted basis), as detailed in the section headed “CLP Thailand Injection” in this announcement

“Company”		CLP Holdings Limited, a company incorporated in Hong Kong with limited liability and whose shares are listed on the Stock Exchange (Stock code: 002)

“Directors”		the directors of the Company

“EGCO”		Electricity Generating Public Company Limited, a public limited liability company incorporated in Thailand listed on the Stock Exchange of Thailand

“HK$”		Hong Kong Dollars

“Ho-Ping”		Ho Ping Power Company, a public company limited by shares incorporated in Taiwan which owns a 1,320MW coal-fired power station at Ho Ping, Taiwan

“Ho-Ping Injection”		the injection by the CLP Group of the Ho-Ping Project Interests into OneEnergy, as detailed in the section headed “Ho-Ping Injection” in this announcement

“Ho-Ping Project Interests”		CLP Group’s project interests in Ho-Ping, including the entire issued share capital of CLP P-SEA, 40% of the issued share capital of HPSC, and shareholders’ loans owed by CLP P-SEA in the amount of approximately US$130 million (HK$1,014 million)

~~Fixed~~5 ~~assets, leasehold land and land use rights totalled HK$84,700 million (December 2005: HK$81,751 million). Movements in the accounts are as follows:~~

(A) Fixed Assets


“HPSC”		HPC Power Services Corporation, a limited liability company incorporated in the British Virgin Islands whose principal business is to provide operation and maintenance services to the power station of Ho-Ping

“Listing Rules”		Rules Governing the Listing of Securities on the Stock Exchange

“Mitsubishi”		Mitsubishi Corporation of Japan, a company incorporated with limited liability in Japan and a 50% joint venture partner of the CLP Group in OneEnergy

“MW”		Megawatts

“NT$”		New Taiwan Dollars

“OneEnergy”		OneEnergy Limited, a company incorporated with limited liability in the Cayman Islands which is 50:50 owned by the CLP Group and Mitsubishi

“Stock Exchange”		The Stock Exchange of Hong Kong Limited

“TCC”		Taiwan Cement Corporation, a company incorporated in Taiwan and the shares of which are listed on the Taiwan Stock Exchange

“US$”		United States Dollars

	Freehold Landand Buildings				Plant, Machinery and Equipment
	Owned		Leased		Owned		Leased		Total
	HK$M		HK$M		HK$M		HK$M		HK$M
Net book value, as at 1 January 2005
- as previously reported	6,002		—		49,506		—		55,508
- adjustment on adoption of finance lease accounting	(152	)	5,389		(3,055	)	14,828		17,010
- as restated	5,850		5,389		46,451		14,828		72,518
Acquisition of a subsidiary	533		—		1,181		1,936		3,650
Additions	572		—		5,176		3,226		8,974
Transfers and disposals	(75	)	(136	)	(143	)	30		(324	)
Depreciation charge	(195	)	(248	)	(2,734	)	(1,466	)	(4,643	)
Exchange differences	(3	)	—		(564	)	(90	)	(657	)
Net book value, as at 31 December 2005	6,682		5,005		49,367		18,464		79,518
Cost	8,677		9,334		72,540		35,215		125,766
Accumulated depreciation	(1,995	)	(4,329	)	(23,173	)	(16,751	)	(46,248	)
Net book value, as at 31 December 2005	6,682		5,005		49,367		18,464		79,518
Net book value, as at 1 January 2006	6,682		5,005		49,367		18,464		79,518
Additions	204		223		2,157		2,700		5,284
Transfers and disposals	15		—		(117	)	(39	)	(141	)
Depreciation charge	(104	)	(127	)	(1,260	)	(820	)	(2,311	)
Exchange differences	7		—		117		18		142
Net book value, as at 30 June 2006	6,804		5,101		50,264		20,323		82,492
Cost	8,889		9,556		74,635		37,888		130,968
Accumulated depreciation	(2,085	)	(4,455	)	(24,371	)	(17,565	)	(48,476	)
Net book value, as at 30 June 2006	6,804		5,101		50,264		20,323		82,492
The above leased assets include:
(a) CAPCO’s operational generating plants and associated fixed assets for the generation of electricity supply to CLP Power Hong Kong under the Electricity Supply Contract between the two parties, following the adoption of HKFRS–Interpretation 4. The net book value of these leased assets amounted to HK$23,602 million as at 30 June 2006 (HK$21,624 million in the restated figures as at 31 December 2005); and

In this announcement, figures in US$ are translated to HK$ at the exchange rate of US$1.00 = HK$7.80 and figures in Baht and NT$ are translated to HK$ at the applicable exchange rates at the relevant time for illustration purposes only.

~~Page~~By 46Order of the Board April Chan Company Secretary

~~Table~~Hong ofKong, ~~Contents~~9 March 2007

~~14.~~CLP ~~Fixed~~Holdings ~~Assets, Leasehold Land and Land Use Rights (continued)~~Limited

(b)incorporated ~~Leased generating plants for our electricity business~~ in ~~Australia~~Hong ~~held~~Kong ~~under~~with ~~agreements~~limited ~~which~~liability) ~~are treated as finance leases. The net book value of these leased assets as at 30 June 2006 was HK$1,821 million.~~

(B)Stock ~~Leasehold~~Code: ~~Land~~002) ~~and Land Use Rights~~

	30 June 2006HK$M		31 December2005 HK$M
Net book value, at beginning of period/year
- as previously restated/reported	2,233		2,240
- adjustment on adoption of finance lease accounting	—		(1	)
- as restated	2,233		2,239
Acquisition of a subsidiary	—		43
Additions	1		2
Transfers and disposals	—		(2	)
Amortisation charge	(26	)	(49	)
Net book value, at end of period/year	2,208		2,233
Cost	2,340		2,339
Accumulated amortisation	(132	)	(106	)
Net book value, at end of period/year	2,208		2,233


Non-executive Directors:		The Hon. Sir Michael Kadoorie, Mr. W. E. Mocatta, Mr. J. S. Dickson Leach, Mr. R. J. McAulay, Mr. J. A. H. Leigh, Mr. R. Bischof, Mr. I. D. Boyce, Mr. P. C. Tan (Mr. Bradley W. Corson as his alternate), Mr. Jason Whittle and Dr. Y. B. Lee

Independent Non-executive Directors:		The Hon. Sir S. Y. Chung, Dr. William K. Fung, Mr. V. F. Moore, Mr. Hansen C. H. Loh, Mr. Paul M. L. Kan, Professor Judy Tsui, Sir Rod Eddington and Mr. Peter T. C. Lee

Executive Directors:		Mr. Andrew Brandler, Mr. Peter P. W. Tse and Mr. Peter W. Greenwood

~~Leasehold~~6 ~~land is mainly held under medium to long term leases (i.e. over 10 years) in Hong Kong. The SoC Agreement considers leasehold land as one type of fixed assets on which permitted return is earned.~~

Page 47

15. Goodwill and other Intangible Assets

	GoodwillHK$M		NegativeGoodwillHK$M		Net BalanceHK$M		OtherIntangibleAssetsHK$M		TotalHK$M
2006
Net carrying value, as at 1 January	5,513		—		5,513		1,417		6,930
Amortisation charge	—		—		—		(91	)	(91	)
Exchange differences	52		—		52		14		66
Net carrying value, as at 30 June	5,565		—		5,565		1,340		6,905
Cost	5,565		—		5,565		1,495		7,060
Accumulated amortisation	—		—		—		(155	)	(155	)
Net carrying value, as at 30 June	5,565		—		5,565		1,340		6,905
2005
Net carrying value, as at 1 January
- as previously reported	24		(1,046	)	(1,022	)	—		(1,022	)
- derecognition of negative goodwill	—		1,046		1,046		—		1,046
- as restated	24		—		24		—		24
Acquisition of a subsidiary	5,817	(a)	—		5,817		1,545	(a)	7,362
Amortisation charge	—		—		—		(66	)	(66	)
Exchange differences	(328	)	—		(328	)	(62	)	(390	)
Net carrying value, as at 31 December	5,513		—		5,513		1,417		6,930
Cost	5,513		—		5,513		1,481		6,994
Accumulated amortisation	—		—		—		(64	)	(64	)
Net carrying value, as at 31 December	5,513		—		5,513		1,417		6,930

Other intangible assets include contracted customers and a lease arrangement under the long-term hedge agreement with Ecogen which arose from the acquisition of the MEB at the end of May 2005. The MEB is considered as a cash-generating unit of the Group during 2006.

Contracted customers and the lease premium are amortised on a straight-line basis over a period of 6 and 14 years respectively.

Note (a): A review of the valuation of contracted customers in Australia resulted in a reallocation of HK$185 million from goodwill to intangible assets; together with the adjustment in the purchase consideration for the MEB (refer to Note (a) on page 39), total goodwill at 31 December 2005 was decreased by HK$1,204 million.

Page 48

16. Interests in Jointly Controlled Entities

	30 June2006HK$M	31 December2005 HK$M
Castle Peak Power Company Limited	6,853	6,647
Guangdong Nuclear Power Joint Venture Company, Limited	2,704	3,077
OneEnergy Limited	2,311	—
Ho-Ping Power Company	1,458	1,536
CLP Guohua Power Company Limited	1,392	1,293
Shandong Zhonghua Power Company, Ltd.	1,103	1,091
Roaring 40s Renewable Energy Pty Ltd	692	686
Guizhou CLP Power Company Limited	445	466
CLP Guangxi Fangchenggang Power Company Limited	433	424
South East Australia Gas Pty Ltd	425	407
Hok Un joint venture	359	400
Hong Kong Pumped Storage Development Company, Limited	327	328
Others	297	306
	18,799	16,661

The above amount includes the loan and advances made to the following jointly controlled entities:

	30 June 2006HK$M	31 December2005 HK$M
Castle Peak Power Company Limited	6,546	6,505
Hong Kong Pumped Storage Development Company, Limited	310	317
Others	13	43
	6,869	6,865

The Group’s share of results of the jointly controlled entities is as follows:

	6 months ended 30 June
	2006HK$M		2005HK$M
Revenue	4,934		5,272
Expenses	(3,340	)	(3,342	)
Share of profit before taxation	1,594		1,930
Taxation	(232	)	(266	)
Share of profit after taxation	1,362		1,664

Page 49

16. Interests in Jointly Controlled Entities (continued)

The following amounts represent the Group’s share of net assets, capital commitments and contingent liabilities of the jointly controlled entities:

	30 June 2006HK$M		31 December2005 HK$M
Non-current assets	30,959		29,205
Current assets	6,755		5,659
Current liabilities	(4,023	)	(3,766	)
Non-current liabilities	(21,761	)	(21,302	)
Net assets at end of period/year	11,930		9,796
Capital commitments at end of period/year	9,782		9,406
Contingent liabilities at end of period/year	440		385

The Group’s capital commitment in relation to its interest in the jointly controlled entities is disclosed in Note 28. There are no contingent liabilities relating to the Group’s interest in these entities.

17. Interests in Associated Companies

	30 June 2006HK$M	31 December2005 HK$M
Electricity Generating Public Company Limited (EGCO)	—	1,692
Gascor Pty Ltd	7	5
	7	1,697

The Group’s share of results of the associated companies is as follows:

	6 months ended 30 June
	2006HK$M		2005HK$M
Share of profit before taxation	152		64
Taxation	(40	)	(13	)
Share of profit after taxation	112		51

Upon the formation of OneEnergy, a joint venture with Mitsubishi Corporation, the Group injected its interest in EGCO into OneEnergy, effectively disposing of one-half of its interest in EGCO (Note 4).

The Group did not have any loan or advances made to associated companies. In addition, there are no contingent liabilities relating to the Group’s interest in these companies.

Page 50

18. Finance Lease Receivables

	Minimum lease payments				Present value of minimum lease payments
	30 June2006HK$M		31 December2005HK$M		30 June2006HK$M	31 December2005HK$M
Amounts receivable under finance leases:
Within one year	485		508		158	165
Later than one year and not later than five years	1,809		2,302		704	893
After five years	3,081		2,934		1,815	1,759
	5,375		5,744		2,677	2,817
Less: unearned finance income	(2,698	)	(2,927	)
Present value of minimum lease payments receivable	2,677		2,817
Analysed as:
Current finance lease receivables (recoverable within 12 months)					158	165
Non-current finance lease receivables (recoverable after 12 months)					2,519	2,652
					2,677	2,817

The effective interest rate of the finance lease receivables was based on the interest rate implicit in the lease.

19. Derivative Instruments

	30 June 2006				31 December 2005
	AssetsHK$M		LiabilitiesHK$M		AssetsHK$M		LiabilitiesHK$M
Cash flow hedges
Forward foreign exchange contracts	78		340		39		332
Interest rate swaps/cross currency & interest rate swaps	135		—		9		48
Energy contracts	146		147		291		258
Fair value hedge
Cross currency & interest rate swap	7		53		129		—
Held for trading or not qualifying as hedges
Forward foreign exchange contracts	21		3		2		20
Interest rate swaps	—		3		—		13
Energy contracts	732		715		1,092		907
	1,119		1,261		1,562		1,578
Less: current portion	(891	)	(829	)	(1,302	)	(1,134	)
Non-current portion of derivative instruments	228		432		260		444

Derivative instruments qualifying as cash flow hedges as at 30 June 2006 have a maturity of between now to approximately six years from the balance sheet date.

Page 51

20. Trade and Other Receivables

	30 June 2006HK$M	31 December2005 HK$M
Trade receivables (aging analysis is shown below)	5,799	4,541
Deposits and prepayments	881	872
Other receivables	—	1,019
Dividends receivable from jointly controlled entities	313	87
Current accounts with jointly controlled entities	12	5
	7,005	6,524

Trade and other receivables attributed to overseas subsidiaries amounted to HK$3,643 million (December 2005: HK$3,257 million).

The Group has established credit policies for customers in each of its core businesses. The credit term for trade receivables ranges from 15 to 60 days.

The aging analysis of the trade receivables, after provisions, is as follows:

	30 June 2006HK$M	31 December2005 HK$M
Below 30 days (including amount not yet due)	5,530	4,350
31-60 days	56	68
61-90 days	69	43
Over 90 days	144	80
	5,799	4,541

For the other receivables of HK$1,019 million at 31 December 2005, refer to Note (a) on page 39.

21. Bank Balances, Cash and Other Liquid Funds

	30 June 2006HK$M	31 December2005 HK$M
Trust fund for unclaimed dividends	10	12
Trust accounts under TRAA (A)	497	556
Short-term investments and bank deposits	1,433	1,305
Bank balances and cash	183	168
	2,123	2,041

(A) Pursuant to a Trust and Retention Account Agreement (TRAA) between GPEC and its lenders, GPEC allocates monthly receipts from its off-taker, Gujarat Urja Vikas Nigam Ltd (GUVNL, formerly known as Gujarat Electricity Board), to various trust accounts for fuel, operating and major maintenance expenses and debt service payments. These amounts are placed by GPEC on short-term deposits or investments prior to being applied for the designated purposes.

Page 52

22. Trade and Other Payables

	30 June 2006HK$M	31 December2005 HK$M
Trade payables (aging analysis is shown below)	2,939	3,116
Other payables and accruals	1,342	1,395
Current accounts with jointly controlled entities (A)	1,340	1,127
Amount due to a jointly controlled entity (B)	457	441
	6,078	6,079

(A) Of the amount due to the jointly controlled entities, HK$1,071 million (December 2005: HK$912 million) was due to CAPCO.

(B) The amount represents the unpaid portion of the subscription price to Roaring 40s Renewable Energy Pty Ltd. Pursuant to the Subscription Agreement, the Group is obliged to pay for share capital of A$117 million by 2008 plus a pre-subscription interest fee of A$2 million. A contribution of A$40 million (approximately HK$236 million) was made in October 2005, with the outstanding amount bearing interest of 6.11% to be repayable on demand.

The aging analysis of the trade payables is as follows:

	30 June 2006HK$M	31 December2005 HK$M
Below 30 days (including amount not yet due)	2,894	3,082
31-60 days	7	—
61-90 days	3	2
Over 90 days	35	32
	2,939	3,116

Page 53

23. Bank Loans and Other Borrowings

Total borrowings in the condensed consolidated balance sheet are analysed as follows:

	Current		Non-Current		Total
	30 June2006HK$M	31 December2005HK$M	30 June2006HK$M	31 December2005HK$M	30 June2006HK$M	31 December2005HK$M
Short-term loans	2,200	867	—	—	2,200	867
Long-term bank loans	2,505	301	14,592	16,447	17,097	16,748
Other long-term borrowings	—	2,340	10,285	9,436	10,285	11,776
Bank loans and other borrowings	4,705	3,508	24,877	25,883	29,582	29,391

During the six months ended 30 June 2006, the Group issued HK$1 billion of fixed rate notes under the Medium Term Note Programme to support the capital requirements of the electricity business in Hong Kong. The Group’s bank loans and other borrowings were repayable as follows:

	Bank Loans		Other Borrowings		Total
	30 June2006HK$M	31 December2005HK$M	30 June2006HK$M	31 December2005HK$M	30 June2006HK$M	31 December2005HK$M
Within one year	4,705	1,168	—	2,340	4,705	3,508
Between one and two years	495	2,440	—	—	495	2,440
Between two and five years	13,635	13,847	—	—	13,635	13,847
After five years	462	160	10,285	9,436	10,747	9,596
	19,297	17,615	10,285	11,776	29,582	29,391

Bank loans and other borrowings totalling HK$11,168 million (December 2005: HK$12,572 million) were attributed to overseas subsidiaries and are non-recourse to the Company. Of these, secured loans for GPEC and Huaiji amounted to HK$629 million (December 2005: HK$575 million) and HK$225 million (December 2005: HK$228 million) respectively. Bank loans for GPEC are secured by fixed and floating charges over its assets while for Huaiji, they are secured by fixed assets and land use rights. Collateralised borrowings for GPEC are secured by trade receivables (Note 20).

The carrying amounts of loans and borrowings approximate their fair values. The fair value of long-term borrowings is determined using the expected future payments discounted at market interest rates prevailing at the period end.

Loans and borrowings of the Group are predominantly in HK$ or AUD. The effective interest rates at the balance sheet date were as follows:

	30 June 2006		31 December 2005
	HK$	AUD	HK$	AUD
Fixed rate loans and loans swapped to fixed rates	4.2% - 6.2%	6.3% - 6.6%	4.2% - 7.1%	6.3% - 6.6%
Variable rate loans and loans swapped from fixed rates	4.1% - 5.3%	6.4% - 6.7%	4.3% - 5.0%	6.1% - 6.4%

As at 30 June 2006, the Group has undrawn bank loan and overdraft facilities of HK$11,346 million (December 2005: HK$13,152 million).

Page 54

24. Obligations under Finance Leases

Following the adoption of HKFRS–Interpretation 4, the Group has commitments under the finance lease arrangement with CAPCO in respect of the operational generating plants and associated fixed assets. Together with the acquisition of the MEB on 31 May 2005, the Group had obligations under finance leases repayable as follows:

	30 June 2006HK$M		31 December2005 HK$M
Minimum lease payments not later than one year	4,878		4,601
later than one year and not later than five years	16,598		15,396
later than five years	29,626		25,614
	51,102		45,611
Future interest expenses on finance leases	(27,620	)	(24,114	)
Present value of minimum lease payments	23,482		21,497
Present value of minimum lease payments not later than one year	1,912		1,803
later than one year and not later than five years	6,765		6,480
later than five years	14,805		13,214
	23,482		21,497

The effective interest rates of the finance lease obligations were based on the interest rate implicit in the lease.

25. Share Capital

	30 June 2006		31 December 2005
	Number ofShares ofHK$5 Each	AmountHK$M	Number ofShares ofHK$5 Each	AmountHK$M
Authorised
At end of period/year	3,000,000,000	15,000	3,000,000,000	15,000
Issued and fully-paid
At end of period/year	2,408,245,900	12,041	2,408,245,900	12,041

There was no movement in the share capital of the Company during the period (year 2005: nil).

Page 55

26. SoC Reserve Accounts

The Development Fund, special provision account and Rate Reduction Reserve of the Group’s major subsidiary, CLP Power Hong Kong, are collectively referred to as SoC reserve accounts in the condensed consolidated balance sheet. The respective balances at the end of the period/year are:

	30 June 2006HK$M	31 December2005 HK$M
SoC reserve accounts
Development Fund (A)	2,947	3,685
Special provision account (B)	—	—
Rate Reduction Reserve (C)	466	489
	3,413	4,174

Movements in the SoC reserve accounts are as follows:

		30 June 2006HK$M		31 December2005 HK$M
(A)	Development Fund
	At beginning of period/year	3,685		3,171
	Transfer (to)/from the income statement (Note 5)	(488	)	527
	One-off rebates	—		(13	)
	Business relief rebate	—		—
	Special rebate to customers(a)	(250	)	—
	At end of period/year	2,947		3,685
(B)	Special provision account
	At beginning of period/year	—		—
	Transfer to the income statement	—		—
	At end of period/year	—		—
(C)	Rate Reduction Reserve
	At beginning of period/year	489		549
	Interest expense charged to the income statement (Note 8)	133		274
	One-off rebates	—		—
	Rebate to customers(b)	(156	)	(334	)
	At end of period/year	466		489

Notes:

(a) A special rebate of HK¢1.8 per unit (2005: nil) was made to customers during the period.

(b) A rebate of HK¢1.1 per unit (2005: HK¢1.1 per unit) was made to customers during the period.

Page 56

27. Notes to the Consolidated Cash Flow Statement

Reconciliation of profit before taxation to net cash inflow from operations:

	6 months ended 30 June
	2006HK$M		2005 HK$M
Profit before taxation	5,558		5,081
Adjustments for:
Operating interest	2,372		1,883
Finance income	(242	)	(251	)
Share of results, net of tax jointly controlled entities	(1,362	)	(1,664	)
associated companies	(112	)	(51	)
Depreciation and amortisation	2,427		2,067
Decrease in finance lease receivables	81		77
Net loss on disposal of fixed assets	8		33
One-off gain on formation of OneEnergy	(291	)	—
Fair value losses on tax assets	56		—
Net exchange difference	4		—
Fair value (gains)/losses on derivative instruments
Cash flow hedges, transfer from equity	(43	)	106
Transactions not qualifying as hedges	82		(7	)
SoC items
Increase in customers’ deposits	45		104
Decrease in fuel clause account	(240	)	(318	)
One-off rebates	—		(13	)
Rebate to customers under SoC	(156	)	(151	)
Special rebate	(250	)	—
	(601	)	(378	)
Transfers from Development Fund and special provision account	(488	)	(338	)
Cash flow before working capital changes	7,449		6,558
Increase in debtors and prepayments	(152	)	(994	)
Increase in creditors and other liabilities	281		294
Increase in current accounts due to jointly controlled entities	206		47
Net cash inflow from operations	7,784		5,905

Page 57

28. Commitments

(A) Capital expenditure on fixed assets, leasehold land and land use rights authorised but not brought into the accounts is as follows:

	30 June 2006	31 December2005
	HK$M	HK$M
Contracted but not provided for	2,781	2,689
Authorised but not contracted for	6,367	6,922
	9,148	9,611

(B) The Group has entered into a number of joint venture arrangements to develop power projects in Thailand and the Chinese mainland. Equity contributions required and made by the Group under each project are summarised below:

Project Name	Total EquityContributionsRequired	Amount Fulfilled as at 30 June 2006	Remaining Balance to beContributed	ExpectedYear forLastContribution
BLCP power project (Thailand)	US$165 million	US$17 million (HK$132 million)	US$148 million (HK$1,149 million)	2007
Fangchenggang power project (Chinese mainland)	RMB966 million	RMB463 million (HK$445 million)	RMB503 million (HK$488 million)	2008
Weihai wind power project (Chinese mainland)	RMB30 million	RMB9 million (HK$9 million)	RMB21 million (HK$20 million)	2008
Nanao II wind power project (Chinese mainland)	RMB36 million	RMB5 million (HK$5 million)	RMB31 million (HK$30 million)	2007

Page 58

29. Related Party Transactions

Below are the more significant transactions with related parties during the period ended 30 June:

(A) Purchases of electricity and gas from affiliated companies

(i) Details of electricity supply contracts relating to the electricity business in Hong Kong with jointly controlled entities are shown below:

	6 months ended 30 June
	2006	2005
	HK$M	HK$M
Electricity supply contract with CAPCO	6,099	5,652
Purchases of nuclear electricity	2,115	2,447
Pumped storage service fee	173	179
	8,387	8,278

Amounts due to the related parties as at 30 June 2006 are disclosed in Note 22.

The amount relating to the electricity supply contract with CAPCO refers to the payments made by CLP Power Hong Kong in discharging its payment obligations under the contract. Following the adoption of lease accounting by the Group, such payments have been accounted for as lease and service payments, finance cost and principal repayments of finance lease obligations.

(ii) Gascor Pty Ltd (Gascor), is a party to a gas supply contract in Victoria with Esso Australia Resources Pty Ltd (Esso) and BHP Billiton Petroleum (Bass Strait) Pty Ltd (BHP). The contract terms between Gascor and Esso/BHP are effectively replicated in the Master Agreement between TRUenergy and Gascor. TRUenergy purchases gas at the wholesale market price from Gascor, which in turn obtains the gas from Esso and BHP. The amount paid to Gascor was HK$401 million (2005: HK$91 million).

(B) Rendering of services to jointly controlled entities

Pursuant to the CAPCO Operating Service Agreement, the charges from CLP Power Hong Kong to CAPCO for the services rendered during the period amounted to HK$526 million (2005: HK$529 million).

Amounts due from the related parties as at 30 June 2006 are disclosed in Note 20. No provisions have been made for doubtful debts in respect of the amounts owed by the related parties.

(C) Loan and advances to affiliated companies are discussed under Notes 16 and 17. As at 30 June 2006, the Group did not have any guarantees which were of significant amount given to or received from these parties.

(D) Total remuneration of Non-executive Directors and Senior Management, which includes three Executive Directors of the Company, Group Director – Managing Director Hong Kong, Group Director – Managing Director Australia, Group Director – Operations, and Group Director – Corporate Development (2005: Four Executive Directors of the Company and Managing Directors of the two major subsidiaries, CLP Power Hong Kong and CLP Power Asia), is as follows:

	6 months ended 30 June
	2006	2005
	HK$M	HK$M
Fees	2	2
Base compensation, allowances and benefits in kind	13	12
Performance bonus
Annual incentive	18	15
Long-term incentive	8	8
Provident fund contributions	2	1
	43	38

Page 59

30. Contingent Liabilities

Under the original power purchase agreement between GPEC and its off-taker GUVNL, GUVNL was required to make a “deemed generation incentive” payment to GPEC when the plant availability was above 68.5% (70% as revised subsequently). GUVNL has been making such payments since December 1997. In September 2005, GUVNL filed a petition before the Gujarat Electricity Regulatory Commission claiming that the “deemed generation incentive” payment should not be paid for the period when the plant was using naphtha as fuel instead of gas. GUVNL’s contention is based on a 1995 Government of India notification which disallowed “deemed generation incentive” for naphtha based power plants. The total amount of the claim plus interest amounts to approximately HK$1,250 million.

On the basis of legal advice that has been sought, the Directors are of the opinion that no provision is required to be made in the accounts in respect of this matter.

Page 60

Scheme of Control Statement

The electricity-related operations of CLP Power Hong Kong and CAPCO (the SoC Companies) have been governed by the SoC Agreement with the Hong Kong Government. A summary of which was disclosed on page 190 in the Annual Report 2005. The calculations shown below are in accordance with the SoC and the agreements between the SoC Companies. The calculations are extracted from the management accounts of CLP Power Hong Kong for the six months ended 30 June 2006.

	(Unaudited) 6 months ended 30 June
	2006		2005
	HK$M		HK$M
SoC Revenue	13,505		13,300
Expenses
Operating costs	1,473		1,454
Fuel	2,339		1,977
Purchases of nuclear electricity	2,115		2,447
Depreciation	2,008		1,825
Operating interest	356		220
Taxation	849		920
	9,140		8,843
Profit after taxation	4,365		4,457
Interest on increase in customers’ deposits	17		2
Interest on long-term financing	406		362
Adjustments required under the SoC
(including share of profit on sale of electricity to Chinese mainland attributable to the SoC Companies)	(85	)	(98	)
Profit for SoC	4,703		4,723
Transfer from Development Fund	488		338
Permitted return	5,191		5,061
Deduct interest
On increase in customers’ deposits	17		2
On long-term financing as above	406		362
On Development Fund and special provision account transferred to Rate Reduction Reserve	133		120
	556		484
Net return	4,635		4,577
Divisible as follows:
CLP Power Hong Kong	2,862		2,795
CAPCO	1,773		1,782
	4,635		4,577
CLP Power Hong Kong’s share of net return
CLP Power Hong Kong	2,862		2,795
Interest in CAPCO	711		715
	3,573		3,510

Page 61

Independent Review Report

To the Board of Directors of CLP Holdings Limited (the Company)

(Incorporated in Hong Kong with limited liability)

We have been instructed by the Company to review the condensed consolidated interim accounts set out on pages 32 to 60.

Respective responsibilities of Directors and Auditors

The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited require the preparation of condensed consolidated interim accounts to be in compliance with Hong Kong Accounting Standard 34 “Interim financial reporting” issued by the Hong Kong Institute of Certified Public Accountants and the relevant provisions thereof. The condensed consolidated interim accounts are the responsibility of, and have been approved by, the directors.

It is our responsibility to form an independent conclusion, based on our review, on the condensed consolidated interim accounts and to report our conclusion solely to you, as a body, in accordance with our agreed terms of engagement and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

Review work performed

We conducted our review in accordance with SAS 700 “Engagements to review interim financial reports” issued by the Hong Kong Institute of Certified Public Accountants. A review consists principally of making enquiries of group management and applying analytical procedures to the condensed consolidated interim accounts and, based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the condensed consolidated interim accounts.

Review conclusion

On the basis of our review, which does not constitute an audit, we are not aware of any material modifications that should be made to the condensed consolidated interim accounts for the six months ended 30 June 2006.

/s/ PricewaterhouseCoopers PricewaterhouseCoopers Certified Public Accountants Hong Kong, 15 August 2006

Page 62

Corporate Governance

CLP is committed to maintaining good corporate governance standards.

Corporate Governance Practices

In the Corporate Governance Report dated 28 February 2006, which was published in our 2005 Annual Report, we reported that the Company had adopted its own Code on Corporate Governance (CLP Code) on 28 February 2005 which incorporated all of the Code Provisions and Recommended Best Practices in the “Code on Corporate Governance Practices” issued by the Hong Kong Stock Exchange (the Stock Exchange Code), save for one exception.

This single deviation from the Recommended Best Practices of the Stock Exchange Code relates to the recommendation that an issuer should announce and publish quarterly financial results. CLP issues quarterly statements which include turnover, interim dividends and progress in major business activities over the quarter. However, CLP does not issue quarterly financial results because in our judgment quarterly reporting does not bring significant benefits to shareholders. The considered reasons for this deviation were stated in the Corporate Governance Report on page 99 of the Company’s 2005 Annual Report.

In the Corporate Governance Report we also described the structure of CLP’s Corporate Governance Framework and how the various key players are involved in ensuring the application of good governance practices and policies within the CLP Group. The progress made in 2005 in the evolution of CLP’s corporate governance practices was set out in the Corporate Governance Report on page 100 of the Company’s 2005 Annual Report. In 2006, we made further progress in our corporate governance practices, including the establishment of a China Committee and the implementation of a development programme for Directors.

During the first half of 2006, two additional Non-executive Directors were appointed to the Board of CLP Holdings. Sir Roderick Ian Eddington was appointed an Independent Non-executive Director effective from 1 January 2006 and Mr. Jason Holroyd Whittle, an alternate to Mr. R. J. McAulay, was appointed a Non-executive Director on 9 May 2006.

As at 30 June 2006 the composition of the Board of CLP Holdings was as follows:

Non-executive Directors Independent Non-executive Directors Executive Directors The Hon. Sir Michael Kadoorie The Hon. Sir S. Y. Chung Mr. Andrew Brandler Mr. W. E. Mocatta Dr. William K. Fung Mr. Peter P. W. Tse Mr. J. S. Dickson Leach Mr. V. F. Moore Dr. Y. B. Lee Mr. R. J. McAulay Mr. Hansen C. H. Loh Mr. J. A. H. Leigh Mr. Paul M. L. Kan Mr. R. Bischof Professor Judy Tsui Mr. I. D. Boyce Sir Rod Eddington Mr. P. C. Tan Mr. Jason Whittle

Directors’ biographies are set out on CLP’s website.

Page 63

The composition of Board Committees remains the same as set out in the Corporate Governance Report (pages 104-106), save that Mr. J. S. Dickson Leach resigned from the Finance and General Committee on 1 April 2006 and Mrs. Betty Yuen, Group Director - Managing Director Hong Kong, and Mr. Richard McIndoe, Group Director - Managing Director Australia, were appointed Members of the Finance and General Committee with effect from 7 June 2006.

Following shareholders’ approval at the Company’s Annual General Meeting held on 25 April 2006, remuneration is payable to the Chairmen and Members (other than Executive Directors and Management) who serve on the Company’s Social, Environmental & Ethics Committee and China Committee. Such remuneration is fixed at the levels shown below for each financial year until the Company in General Meeting otherwise determines and took effect from the date of the first meeting of the Social, Environmental & Ethics Committee and China Committee on 1 December 2005 and 10 January 2006 respectively.

		HK$
Social, Environmental & Ethics Committee
Chairman		30,000
Member		20,000
China Committee
Chairman		56,000
Member		40,000

In respect of the year ended 31 December 2005, the Board considered CLP’s internal control system effective and adequate. Details of the standards, processes and effectiveness of CLP’s internal control system were set out in the Corporate Governance Report on pages 108 to 110 of the Company’s 2005 Annual Report.

Through our review of CLP Group’s system of internal control, we identified in the second quarter of 2006 a number of control deficiencies principally in relation to limited segregation of duties and weak general computer controls, mainly at TRUenergy, a newly acquired subsidiary. The bulk of those deficiencies have since been rectified, and we are not aware of any situation where these have been exploited to impact our financial position or results of operations. We shall retest all related controls starting in the third quarter of 2006, and we expect the retesting to be completed by 31 December 2006.

During the six months ended 30 June 2006 the Company met the Code Provisions set out in the Stock Exchange Code contained in Appendix 14 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (Listing Rules).

The Audit Committee has reviewed the accounting principles and practices adopted by the Group and the unaudited condensed accounts for the six months ended 30 June 2006. All of the Audit Committee members are appointed from the Independent Non-executive Directors, with the Chairman and a member having appropriate professional qualifications and experience in financial matters.

Page 64

Interests of Directors and Substantial Shareholders

Since 1989, the Company has adopted its own Code for Securities Transactions by Directors (CLP Securities Code), which is largely based on the Model Code set out in Appendix 10 of the Listing Rules. The CLP Securities Code also applies to Senior Management (comprising the three Executive Directors, Group Director - Managing Director Hong Kong, Group Director - Managing Director Australia, Group Director - Operations and Group Director - Corporate Development, whose biographies are set out on CLP’s website) and other “Specified Individuals” such as senior managers in the CLP Group. The CLP Securities Code has been updated from time to time to reflect new regulatory requirements as well as CLP Holdings’ strengthened regime of disclosure of interests in its securities.

The current CLP Securities Code is on terms no less exacting than the required standard set out in the Model Code.

All Directors and Senior Management have confirmed, following specific enquiry by the Company, that they have complied with the required standard set out in the Model Code and CLP Securities Code throughout the period from 1 January to 30 June 2006.

Save for the shareholdings disclosed below by the three Executive Directors and the 600 shares held by Group Director - Operations, the other Senior Management did not have any interests in CLP Holdings’ securities as at 30 June 2006.

Interests of Directors and Chief Executive Officer

The interests/short positions of each of the Directors and Chief Executive Officer in the shares, underlying shares and debentures of the Company or any of the Company’s associated corporations (within the meaning of the Securities and Futures Ordinance) as at 30 June 2006, as recorded in the register required to be kept under Section 352 of Part XV of the Securities and Futures Ordinance, are set out in the table and explanatory notes below:

1. Aggregate long position in the shares, underlying shares and debentures of the Company and its associated corporations

The interests of Directors and Chief Executive Officer in the shares of the Company (other than pursuant to equity derivatives such as share options, warrants to subscribe or convertible bonds) as at 30 June 2006 were as follows:

Directors	Capacity	Total Interestsin Number ofOrdinaryShares of theCompany	% of the IssuedShare Capitalof theCompany
The Hon. Sir Michael Kadoorie	Note (a)	475,381,026	19.7397
Mr. W. E. Mocatta	Founder of a discretionary trust	250,000	0.0104

Page 65

Directors	Capacity	Total Interestsin Number ofOrdinaryShares of theCompany	% of the IssuedShare Capitalof theCompany
Mr. J. S. Dickson Leach	Founder of a discretionary trust Note (b)	3,436	0.0001
Mr. R. J. McAulay	Note (c)	439,800,565	18.2623
The Hon. Sir S. Y. Chung	Beneficial owner	393,789	0.0164
Dr. William K. Fung	Beneficial owner	120,000	0.0050
Mr. J. A. H. Leigh	Beneficial owner	22,000	0.0009
Mr. R. Bischof	Beneficial owner	50,000	0.0021
Mr. P. C. Tan	Interests held jointly with spouse	5,000	0.0002
Mr. Andrew Brandler(Chief Executive Officer)	Note (d)	10,600	0.0004
Mr. Peter P. W. Tse	Note (e)	20,600	0.0009
Dr. Y. B. Lee	Note (f)	15,806	0.0007
Mr. Jason Whittle	Note (g)	238,409,771	9.8997

Notes:

(a) The Hon. Sir Michael Kadoorie was deemed (by virtue of the Securities and Futures Ordinance) to be interested in 475,381,026 shares in the Company. These shares were held in the following capacity:

i) 1,243 shares were an interest of his spouse, Lady Kadoorie.

ii) 236,335,571 shares were held by discretionary trusts, of which The Hon. Sir Michael Kadoorie is one of the discretionary objects.

iii) 239,044,212 shares were held by a discretionary trust, of which The Hon. Sir Michael Kadoorie is one of the discretionary objects and the founder.

For the purpose of the Securities and Futures Ordinance, the spouse of The Hon. Sir Michael Kadoorie was taken to have a discloseable duty in Hong Kong in relation to the 239,044,212 shares referred to in (iii) above. The spouse of The Hon. Sir Michael Kadoorie was therefore deemed to be interested in 239,045,455 shares in the Company representing approximately 9.93% of the issued share capital of the Company, of which 1,243 shares were held by her as beneficial owner and 239,044,212 shares were attributed to her pursuant to the Securities and Futures Ordinance for disclosure purposes. Nevertheless, she has no interest, legal or beneficial, in these 239,044,212 shares attributed to her for disclosure purposes.

Page 66

(b) According to the register of directors’ and chief executives’ interests and short position required to be kept under Section 352 of Part XV of the Securities and Futures Ordinance, Mr. J. S. Dickson Leach is the beneficial owner of 3,436 ordinary shares of the Company. The Company was notified by Mr. J. S. Dickson Leach that the capacity of his interest had been changed from Beneficial Owner to Founder of a Discretionary Trust.

(c) Mr. R. J. McAulay was deemed (by virtue of the Securities and Futures Ordinance) to be interested in 439,800,565 shares in the Company. These shares were held in the following capacity:

i) 13,141 shares were held in a personal capacity.

ii) 236,335,571 shares were held by discretionary trusts, of which Mr. R. J. McAulay is one of the discretionary objects.

iii) 203,451,853 shares were held by a discretionary trust, of which Muriel, Lady Kadoorie, mother-in-law of Mr. R. J. McAulay, is the founder and a beneficiary and Mr. R. J. McAulay, his wife and members of his family are discretionary objects.

(d) 600 shares were held in a personal capacity and 10,000 shares were held in a beneficial owner capacity.

(e) 600 shares were held in a personal capacity and 20,000 shares were held in a beneficial owner capacity.

(f) 600 shares were held in a personal capacity and 15,206 shares were held jointly with spouse.

(g) Mr. Jason Whittle was deemed (by virtue of the Securities and Futures Ordinance) to be interested in 238,409,771 shares in the Company. These shares were held in the following capacity:

i) 600 shares were held in a personal capacity.

ii) 236,335,571 shares were held by discretionary trusts, of which Mr. Jason Whittle is one of the discretionary objects.

iii) 2,073,600 shares were indirectly held by the spouse of Mr. Jason Whittle.

Messrs. I. D. Boyce, V. F. Moore, Hansen C. H. Loh and Paul M. L. Kan, Professor Judy Tsui and Sir Rod Eddington who are Directors of the Company, and Mr. Bradley W. Corson who is an Alternate Director have each confirmed that they had no interests in the shares of the Company or any of its associated corporations as at 30 June 2006.

None of the Directors or the Chief Executive Officer had interests in debentures, under equity derivatives or in underlying shares of the Company and its associated corporations as at 30 June 2006.

2. Aggregate short position in the shares, underlying shares and debentures of the Company and its associated corporations

None of the Directors or the Chief Executive Officer had short positions in respect of shares, debentures, under equity derivatives or interests in underlying shares of the Company and its associated corporations as at 30 June 2006.

At no time during the period was the Company, its subsidiaries or its associated companies a party to any arrangement to enable the Directors and the Chief Executive Officer of the Company (including their spouse and children under 18 years of age) to acquire benefits by an acquisition of shares or underlying shares in, or debentures of, the Company or its associated corporations.

Page 67

Interests of Substantial Shareholders

The interests/short positions of substantial shareholders in the shares and underlying shares of the Company as at 30 June 2006, as recorded in the register required to be kept under Section 336 of Part XV of the Securities and Futures Ordinance, are set out in the table and explanatory notes below:

1. Aggregate long position in the shares and underlying shares of the Company

The Company had been notified of the following substantial shareholders’ interests in the shares (other than pursuant to equity derivatives such as share options, warrants to subscribe or convertible bonds) as at 30 June 2006.

Substantial Shareholders	Capacity	Total Interests inNumber ofOrdinary Sharesof the Company	% of the IssuedShare Capital ofthe Company
Acorn Holdings Corporation	Beneficiary	196,468,538Note (a)	8.16
Bermuda Trust Company Limited	Trustee / Interests of controlled corporations	682,978,836Note (a)	28.36
Bermuda Trust (Cayman) Limited	Trustee	203,451,853Note (b)	8.45
Esko Limited	Interests of controlled corporations	236,335,571Note (a)	9.81
Hesko Limited	Interests of controlled corporations	236,335,571Note (a)	9.81
HWR Trustees Limited (now known as Harneys Trustees Limited)	Interests of controlled corporations	240,482,771Note (a)	9.99
Lakshmi Company Limited	Beneficiary	196,468,538Note (a)	8.16
Lawrencium Corporation	Beneficiary	196,468,538Note (a)	8.16
Merlin Investments Limited	Beneficiary	196,468,538Note (a)	8.16
Mikado Holding Inc.	Trustee	239,044,212Note (a)	9.93

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Substantial Shareholders	Capacity	Total Interests inNumber ofOrdinary Sharesof the Company	% of the IssuedShare Capital ofthe Company
Mikado Investments Limited	Interest of controlled corporation / Beneficiary of trusts	239,044,212Note (a)	9.93
Muriel, Lady Kadoorie	Founder and Beneficiary	203,451,853Note (b)	8.45
New Boron Holding Corporation	Trustee	193,512,472Note (a)	8.04
Oak CLP Limited	Beneficiary	196,554,172Note (b)	8.16
Oak (Unit Trust) Holdings Limited	Trustee	196,554,172Notes (a) & (b)	8.16
Mr. R. Parsons	Trustee	196,554,172Note (c)	8.16
Sir Sidney Gordon	Trustee	205,525,453Note (c)	8.53
The Hon. Sir Michael Kadoorie	Note (d)	475,381,026Note (d)	19.74
Mr. R. J. McAulay	Note (e)	439,800,565Note (e)	18.26
Mr. Jason Whittle	Note (f)	238,409,771Note (f)	9.90
Guardian Limited	Beneficiary / Interests in controlled corporations	196,554,172Note (c)	8.16

Notes:

(a) The interests of Bermuda Trust Company Limited in the shares of the Company include the interests in the Company held by Esko Limited, Hesko Limited, Acorn Holdings Corporation, Lawrencium Corporation, Mikado Holding Inc., Mikado Investments Limited, Oak (Unit Trust) Holdings Limited, Lakshmi Company Limited and Merlin Investments Limited.

The interests of Bermuda Trust Company Limited in the shares of the Company also include the shares held by discretionary trusts of which The Hon. Sir Michael Kadoorie and/or Mr. R. J. McAulay and/or Mr. Jason Whittle are among the discretionary objects as disclosed in “Interests of Directors and Chief Executive Officer”.

Page 69

Bermuda Trust Company Limited was deemed to be interested in the shares in which Esko Limited, Hesko Limited, Acorn Holdings Corporation, Lawrencium Corporation, Mikado Holding Inc., Mikado Investments Limited, Oak (Unit Trust) Holdings Limited, Lakshmi Company Limited and Merlin Investments Limited were interested, either in the capacity as trustee or by virtue of having direct or indirect control over such companies.

Esko Limited and Hesko Limited together controlled Lakshmi Company Limited and Merlin Investments Limited and were therefore deemed to be interested in the shares in which Lakshmi Company Limited and Merlin Investments Limited were interested. The Company has been advised that Lakshmi Company Limited, Merlin Investments Limited, Acorn Holdings Corporation and Lawrencium Corporation were deemed to be interested in the same 196,468,538 shares in which New Boron Holding Corporation was deemed to be interested.

Esko Limited and Hesko Limited together controlled Acorn Holdings Corporation and Lawrencium Corporation and were therefore deemed to be interested in the shares in which such companies were deemed interested. In addition, Esko Limited and Hesko Limited were deemed interested in 39,867,033 shares through other controlled corporations controlled by them.

The Company was notified by New Boron Holding Corporation that it was interested in 193,512,472 shares as at 1 April 2003. However, HWR Trustees Limited (now known as Harneys Trustees Limited) indicated in its latest disclosure form that as at 17 January 2005, it was interested in, inter alia, 200,615,738 shares through its wholly-owned subsidiary, New Boron Holding Corporation. Therefore, New Boron Holding Corporation was interested in the same 200,615,738 shares as at 17 January 2005 but was not itself under a duty to notify the Company of the change under the Securities and Futures Ordinance.

In addition, the Company was notified by Oak (Unit Trust) Holdings Limited that it was interested in 196,554,172 shares as at 26 August 2003. However, Bermuda Trust Company Limited indicated in its latest disclosure form that as at 24 June 2005, it was interested in, inter alia, 203,451,853 shares through its wholly-owned subsidiary, Oak (Unit Trust) Holdings Limited. Therefore, Oak (Unit Trust) Holdings Limited was interested in the same 203,451,853 shares as at 24 June 2005 but was not itself under a duty to notify the Company of the change under the Securities and Futures Ordinance.

(b) The interests of Bermuda Trust (Cayman) Limited in the shares of the Company include the interests in the Company in which Oak CLP Limited, Oak (Unit Trust) Holdings Limited and Muriel, Lady Kadoorie were deemed to be interested.

The interests of Muriel, Lady Kadoorie in 203,451,853 shares of the Company include shares in which Mr. R. J. McAulay, Mr. R. Parsons and Sir Sidney Gordon were deemed to be interested.

Bermuda Trust (Cayman) Limited was interested in the 203,451,853 shares by virtue of its capacity as trustee of a trust of which Muriel, Lady Kadoorie is the founder and a beneficiary and Mr. R. J. McAulay is one of the discretionary objects. Bermuda Trust (Cayman) Limited, in its capacity as trustee of a discretionary trust, controlled Oak CLP Limited and was therefore deemed to be interested in the shares in which Oak CLP Limited was interested. The Company was notified by Oak CLP Limited that it was interested in 196,554,172 shares as at 26 August 2003. However, Bermuda Trust (Cayman) Limited indicated in its latest disclosure form that as at 5 February 2004, it was interested in 203,451,853 shares through its wholly-owned subsidiary, Oak CLP Limited. Therefore, Oak CLP Limited was interested in the same 203,451,853 shares as at 5 February 2004 but was not itself under a duty to notify the Company of the change under the Securities and Futures Ordinance.

(c) Mr. R. Parsons and Sir Sidney Gordon, in their capacities as trustees of certain trusts, jointly controlled Guardian Limited and therefore were deemed to be interested in the shares in which Guardian Limited was deemed to be interested. Accordingly, the 196,554,172 shares in which Guardian Limited was interested is duplicated within the interests attributed to each of Sir Sidney Gordon and Mr. R. Parsons.

Sir Sidney Gordon was also deemed to be interested in 205,525,453 shares in his capacity as trustee of certain trusts.

Page 70

(d) The aggregate long position in the shares of the Company of The Hon. Sir Michael Kadoorie is listed below:

Interests in the Ordinary Shares of the Company

Number				Capacity
1,243239,044,212475,379,783				Interest of spouse Founder of a discretionary trust Discretionary object of various discretionary trusts

The interests of The Hon. Sir Michael Kadoorie as a founder of a discretionary trust and a discretionary object of various discretionary trusts are duplicated between each other. His interests, apart from the interest of his spouse, are also duplicated by the interests in the Company held by Bermuda Trust Company Limited and certain discretionary trusts of which Mr. R. J. McAulay and Mr. Jason Whittle are among the discretionary objects as disclosed in Notes (e) and (f) below.

For the purpose of the Securities and Futures Ordinance, the spouse of The Hon. Sir Michael Kadoorie was taken to have a discloseable duty in Hong Kong in relation to the 239,044,212 shares referred to above. The spouse of The Hon. Sir Michael Kadoorie was therefore deemed to be interested in 239,045,455 shares in the Company representing approximately 9.93% of the issued share capital of the Company, of which 1,243 shares were held by her as beneficial owner and 239,044,212 shares were attributed to her pursuant to the Securities and Futures Ordinance for disclosure purposes. Nevertheless, she has no interest, legal or beneficial, in these 239,044,212 shares attributed to her for disclosure purposes.

(e) See Note (c) under “Interests of Directors and Chief Executive Officer”.

(f) See Note (g) under “Interests of Directors and Chief Executive Officer”.

2. Aggregate short position in the shares and underlying shares of the Company

As at 30 June 2006, the Company had not been notified of any short positions being held by any substantial shareholder in the shares or underlying shares of the Company.

Interests of Any Other Persons

As at 30 June 2006, the Company had not been notified of any persons other than the substantial shareholders who had interests or short positions in the shares or underlying shares of the Company, which are required to be recorded in the register required to be kept under Section 336 of Part XV of the Securities and Futures Ordinance.

Purchase, Sale or Redemption of the Company’s Listed Shares

There was no purchase, sale or redemption of the Company’s listed shares by the Company or any of its subsidiaries during the six months ended 30 June 2006.

Page 71

Information for our Investors

Financial Diary

Announcement of interim results		15 August 2006
Interim report posted to Shareholders		1 September 2006
Last day to register for second interim dividend		7 September 2006
Book close day		8 September 2006
Payment of second interim dividend		15 September 2006
Financial year end		31 December 2006

Interim Report

Printed in English and Chinese languages, available on our website at www.clpgroup.com on 22 August 2006 and posted to Shareholders on 1 September 2006.

Those Shareholders who (a) received our Interim Report 2006 electronically and would like to receive a printed copy or vice versa; or (b) received our Interim Report 2006 in either English or Chinese language version only and would like to receive a printed copy of the other language version or to receive printed copies of both language versions in future, are requested to write to the Company Secretary or the Company’s Registrars.

Shareholders may at any time change their choice of the language or means of receipt of the Company’s corporate communications free of charge by notice in writing to the Company Secretary or the Company’s Registrars.

Company’s Registrars

Computershare Hong Kong Investor Services Limited

Address:		46/F., Hopewell Centre, 183 Queen’s Road East, Hong Kong
Telephone:		(852) 2862 8628
Facsimile:		(852) 2865 0990
E-mail:		hkinfo@computershare.com.hk

Share Listing

CLP Holdings shares are listed on the Stock Exchange of Hong Kong and are traded over the counter in the United States in the form of American Depositary Receipts.

Our Stock Code

The Stock Exchange of Hong Kong:		002
Bloomberg:		2 HK
Reuters:		0002.HK
Ticker Symbol for ADR Code:		CLPHY
CUSIP Reference Number:		18946Q101

Our Contact Details

Address:		147 Argyle Street, Kowloon, Hong Kong
Telephone:		(852) 2678 8228 (Shareholders’ hotline) (852) 2678 8322 (Investor Relations Manager)
Facsimile:		(852) 2678 8390 (Company Secretary) (852) 2678 8530 (Investor Relations Manager)
E-mail:		cosec@clp.com.hk (Company Secretary) IR_Dept@clp.com.hk (Investor Relations Manager)

Page 72

An Energetic Summer for our Young People …

For the third summer in succession, CLP is partnering with Junior Achievement Hong Kong to launch the Young Power Programme 2006 in Hong Kong. This will offer an opportunity to 50 secondary school students from 10 schools to go on a journey of discovery that will cover the technical, environmental and social responsibilities, as well as the business aspects, of electricity supply and customer service.

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Filing Compare · CLP HOLDINGS LTD