In Pursuit of Excellence

Targets Achieved in 2011

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Targets Set Status

Environmental Conservation

Devise a long-term low carbon roadmap in 2011 in support of the Hong Kong Government’s initiatives to combat climate change.

Achieved

Expand the 550kW TFPV solar power system at Lamma Power Station to 1MW capacity by 2012.

In Progress

Move forward to develop a 100MW offshore wind farm in Hong Kong by setting up a wind monitoring station at the proposed site in 2011 to collect the necessary data and information for detailed engineering design of the project.

Missed (see note 1)

Enhance the turbine efficiency of Unit L5 at Lamma Power Station in 2011. Achieved

Complete the Boiler Start-up Low Sulphur Fuel Conversion projects for Units L1 and L3 at Lamma Power Station in 2011.

Achieved

Implement a new programme to reclaim SF6 (a GHG) from scrapped electrical equipment from HK Electric’s electricity network in 2011.

Achieved

Obtain at least one Carbon”Less” Certificate, one “Class of Excellence” Wastewi$e Label and one “Class of Excellence” Energywi$e Label under the Hong Kong Awards for Environmental Excellence in 2011.

Achieved

Procure more electric vehicles for our vehicle fleet in 2011. Achieved

Conduct at least 50 energy audits for HK Electric’s non-domestic customers in 2011 to help them identify energy-saving opportunities.

Achieved

Inaugurate a new Smart Power Centre in 2011 to promote smart use of electricity. Achieved

Inaugurate a new Domestic Electric Kitchen in 2011 to promote green cooking among domestic customers.

Achieved

Economic & Social Development, Health & Safety

Build the necessary electricity infrastructure for Hong Kong’s MTR West Island Line and South Island Line from 2013 to 2016 to support the economic and social development of the community.

In Progress

Acquire a new PAS55 certification for assets management at Lamma Power Station by 2012 to enhance plant reliability and availability.

In Progress

Fulfil all our customer service pledges, embracing supply reliability, speediness of provision of supply and other customer services including emergency services.

Achieved

Further expand the Plant Ownership Programme at Lamma Power Station by adding three new projects in 2011 to enhance plant reliability and availability, and to facilitate development of young engineers.

Achieved

Launch a new overseas training programme for our young engineers in 2011. Achieved

Launch a new funding programme in 2011 to promote employee-initiated volunteer work.

Achieved

Strengthen evaluation of the effectiveness of community programmes in 2011. Achieved

Establish a team of Good Neighbour Programme Ambassadors among our employees.

In Progress

Review with coal suppliers in 2011 on their CSR commitments and activities. Achieved

Achieve a reduction in the Disabling Injury Frequency Rate (DIFR) and Disabling Injury Severity Rate (DISR) in 2011 as compared to 2010.

Achieved for DIFR

Missed for DISR (see note 2)

Notes:1 Completion of installation of wind monitoring station (WMS) was slightly delayed to February 2012 due to adverse weather and marine conditions.2 One incident in January 2011 led to a higher Disabling Injury Severity Rate (DISR), when a member of our ferry crew lost his balance while

dismounting from a bicycle at Lamma Power Station and injured the lower portion of his spine. Following investigation, we have put safety measures in place to avoid recurrence of this incident.

As a responsible corporate citizen with over 120 years history in Hong Kong, we have been focusing on providing a safe and reliable power supply to our customers, while serving and caring for the community in which we operate.

Protecting the environment is another key part of our mission as a responsible company and we strive to reduce the emissions and other environmental impacts from our operations. Recognising that climate change is a global issue, we have put measures in place to reduce our carbon footprint and to help our customers do the same.

We value our people and we make sure that their safety is our number one priority, while giving them the tools they need to progress in their careers.

Through all these measures we are happy to be able to reward our shareholders for the trust and commitment they show to our Company by maintaining a strong financial position.

Looking Ahead

50

As Power Assets grows with global and local business opportunities, we realise we will face challenges in the future, including uncertainty in the supply and price of resources, global financial changes and more stringent expectations with regard to the environment. Looking ahead, we are confident that our core values will remain the same and that this will enable us to achieve sustainable growth and to continue to offer our customers the same high-quality service that we have provided in the past.

EnvironmentWhile we have put a lot of measures in place to reduce the environmental impact of our operations, we realise there is always more we can do. We will continue to push ourselves to perform better and set more challenging targets for the future. One of our key goals is to move forward with the installation of the offshore wind farm in Hong Kong to further develop our renewable energy resources and strive to meet the emission caps stipulated by the Hong Kong Government, particularly the new caps for 2015 and beyond.

• Substantially complete the expansion of the 550kW TFPV solar power system at Lamma Power Station to 1MW in 2012.

• Enhance the turbine efficiency of Unit L4 at Lamma Power Station in 2012.

• Move forward to develop a 100MW offshore wind farm in Hong Kong by setting up a wind monitoring station at the proposed site in 2012 and collecting the necessary data and information for detailed engineering design of the project by 2013.

• Reduce fuel usage of the Company’s vehicle fleet in 2012 as compared with 2011.

• Increase EV mileage in 2012 as compared with 2011.

• Install solar air-conditioning system for more vehicles in 2012.

• Conduct at least 50 energy audits for HK Electric’s non-domestic customers in 2012 to help them identify energy-saving opportunities.

• Obtain at least one Carbon”Less” Certificate, one “Class of Excellence” Wastewi$e Label and one “Class of Excellence” Energywi$e Label under the Hong Kong Awards for Environmental Excellence in 2012.

• Establish an energy management system based on ISO 50001 for Lamma Power Station in 2012.

• Extend the GHG assertions conforming to ISO 14064 to cover all our operations in Hong Kong in 2012.

Targets (Environment)

51

Health & SafetyMaintaining the safety of our people is an ongoing process and we can never just rely on past good performance. In 2012 we will continue to review and assess our health and safety policies and strategies to find ways to further reduce risk and move towards achieving our goal of accident-free operations.

• Achieve a reduction in the Disabling Injury Frequency Rate (DIFR) in 2012 as compared to the average over the past three years.

• Achieve a reduction in the Disabling Injury Severity Rate (DISR) in 2012 as compared to the average over the past three years.

• Obtain at least two Indoor Air Quality Certificates (Excellent Class) in 2012.

• Build the necessary electricity infrastructure for Hong Kong’s MTR West Island Line and South Island Line from 2013 to 2016 to support the economic and social development of the community.

• Launch a smart grid pilot project in 2012.

• Launch a new round of e-bill promotion in 2012 to encourage at least 5,000 customers to switch to e-bills.

• Introduce e-bill service for the visually impaired customers in 2012.

• Fulfil all our customer service pledges, embracing supply reliability, speediness of provision of supply and other customer services including emergency services in 2012.

• Launch the Equal Opportunity Policy in 2012.

• Further expand the Plant Ownership Programme at Lamma Power Station by adding three new projects in 2012 to enhance plant reliability and availability, and to facilitate development of young engineers.

• Engage more than 1,000 participants in company volunteer services in 2012.

• Arrange school talks on low carbon living for 6,000 students in 2012.

Partners & CommunityOur mission is to deliver excellent customer service and supply reliability and we aim to continue doing so in the future. In 2012 we will work hard to ensure that we maintain our record of providing 99.999% power supply reliability and to continue to improve the quality of our customer care. Smart grid has become a focal point of development in the electricity industry worldwide. We have plans for a smart grid pilot project in 2012 which will enable us to test the underlying technologies and solutions in advanced metering infrastructure, low voltage automation, home area networks, and smart EV charging in the local environment.

We also recognise the role we can play in promoting energy efficiency and educating the public and in 2012, we will carry on in our efforts to reach out to our customers and raise awareness. We will continue our efforts to care for our employees and offer relevant training and opportunities for development, as well as support and encourage more volunteer work to care for those in need.

While we strive to continue with our success story, we are aware of the need for this growth to be done in a sustainable way. In 2012 we will keep on looking for suitable investment opportunities outside Hong Kong.

Targets (Partners & Community)

Targets (Health & Safety)

Awards and Recognition

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Corporate/ Community

Total Caring Award 2010/11 Hang Seng Corporate Sustainability Index

Caring Company Award: “Five Year Plus” Caring Company Logo

Galaxy Awards 2011

• Sustainability Report – Silver Award in “Cover Design” & Honours Award in “Websites – Sustainability Report”

The Community Chest 2010/11

• President’s Award

• Gold Award (Corporate & Employee Contribution Programme)

Age Friendly Hong Kong Appreciation Scheme 2011

• Golden Star Award

• The Favourite Elderly Care Project – U3A Network of Hong Kong

My Top 10 Favourite Hong Kong Apps Award

2nd Hong Kong Outstanding Corporate Citizenship Award

• Gold Prize in Services Category

• Bronze Prize in Volunteer Category

International ARC Awards

• Annual Report 2010 – Silver Award for Cover Photo/ Design & Honours Award for Printing & Production

• Sustainability Report – Honours Award in “Interactive Annual Report – Sustainability Report”

Customers

HK Retail Management Association Mystery Shoppers Programme (Nov 2010 to Jan 2011)

• Service Category Leader – Retail (Services) Category

Asia Pacific Customer Service Consortium Customer Relationship Excellence Awards 2010

Corporate Category

• Customer Relationship Excellence – Outstanding Achievement

• Contact Centre of the Year (Under 50 Seats)

• Customer Service Centre of the Year (Public Utility)

• Public Service of the Year

Individual Category

• Customer Service Team Leader of the Year (Public Service – Contact Centre)

• Customer Service Professional of the Year (Public Service – Contact Centre)

• Three Merits – Customer Service Professional of the Year (Contact Centre)

HK Retail Management Association Mystery Shoppers Programme (Mar to May 2011)

• Service Category Leader – Retail (Services) Category

HK Retail Management Association Mystery Shoppers Programme (Jul to Sep 2011)

• Service Category Leaders – Retail (Services) Category

HK Retail Management Association Mystery Shoppers Programme

• 2011 Service Retailers of the Year – Retail (Services) Category

Hong Kong Service Awards 2011

• Energy Utilities Hong Kong Call Centre Association Awards 2011

• Mystery Caller Assessment Award – Gold Award

• Inbound Contact Centre of the Year (Below 50 seats) – Silver Award

• Inbound Contact Centre Manager of the Year – Bronze Award

2011 Best SME’s Partner Award

Quality Life Award

• Quality Health Cooking Award

Supreme Service Awards 2011

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Environment

Corporate Green Driving Award Scheme

• Gold Award

2010 Hong Kong Awards for Environmental Excellence

• Carbon “Less” 12% Certificate (Head Office)

• Carbon “Less” 5% Certificate (Administrative Building, Amenity Building, F&S Building, New Control Building, F&A Building)

• Carbon “Less” 6% Certificate (GM Building, T&W Building)

Hang Seng Pearl River Delta Environmental Awards 2009/10

• Green Medallist

Hong Kong Leaders’ Choice Brand Awards 2011

• Excellence Brand of Green Enterprise

Prime Awards for Eco-Business 2011

• Platinum Award

The Hong Kong Institution of Engineers Environmental Paper Award 2010

• 2 Merits

Hong Kong Awards for Environmental Excellence – Energywi$e Label

• Class of Excellence

2010 Hong Kong Awards for Environmental Excellence – Sectoral Awards (Public Organisations & Utilities)

• Certificate of Merit

• IAQwi$e Label – Class of Excellence

Hong Kong Awards for Environmental Excellence – Energywi$e Label

• Class of Good

Capital Entrepreneur Green Enterprise 2011

• Green Enterprise Award

Capital Outstanding Green Excellence Award 2011

• Green Performance Award (Green Electric Cooking)

Hong Kong Awards for Environmental Excellence – 2 Wastewi$e Labels

• Class of Excellence Hong Kong Green Awards 2011 – Green Management Award

• Gold AwardYounger Members Exhibition and Conference 2011

• Champion of Industry Section

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Overseas

Northern Gas

• Award of ExcellenceCitiPower and Powercor

• Project Management Achievement Awards in the Construction / Engineering

• Qantaslink Regional Award

• Australian Service Excellence Awards, Victorian and National Large Business category

• Highly Commended – Victorian Customer Service Team Leader of The Year

Jinwan

• Advanced Open and Democratic Management Enterprise in Guangdong

• Class A Tax Payer in Zhuhai

• Advanced National Electric Power Enterprise Management

• Award of Green and Charity in Guangdong

ETSA

• South Australian Large Business of the Year

• Employer of the Year

Laoting

• China Electric Power Quality Engineering Award

RPCL

• Bronze Level of the Outstanding Performance of the Zero Accident Campaign

Quality, Health & Safety

Chemical Laboratory Safety Competition 2010

• Gold Award (Commercial Sector)

2010/11 Occupational Health Award

• Bronze Award

Award Scheme for the Outstanding Employees in Occupational Safety & Health 2011

• Meritorious Award in the Frontline Employee Group of the Enterprise/Organisation Category

The 10th Hong Kong Occupational Safety & Health Award

• Best Presentation Award – Gold Award

• Safety Management System Award – Silver Award

• Safety Enhancement Program Award – Silver Award

• OSH Annual Report Award – Silver Award

• Best Presentation Award – Bronze Award

• 2 Safety Performance Awards – Others

Considerate Contractors Site Award Scheme 2010

• 3 Certificates of Appreciation

The 6th Regional Safety Quiz

• 1st Runner-up in Enterprise Group

The Occupational Safety & Health Quiz 2011

• 1st & 2nd Runners-up in Cup Final

• 1st Runner-up in Plate Final

Outstanding Safety Performance Awards for Electrical Worker 2011

• Silver Prize & 2 Merits

Staff

Engineering Week 2011 Speak Out for Engineering Presentation Competition

• 1st Runner-up (two awards)

• 2nd Runner-up (two awards)

Lamma Island (Luk Chau) Dragon Boat Race

• 2nd Runner-up of Sun Tak Seafood Cup

Aberdeen Dragon Boat Race

• 2nd Runner-up of Medium-sized Friendship Race

2011 Hong Kong International Dragon Boat Races

• Champion (Small Boat) in International Silver Cup Final

• 1st Runner-up (Standard Boat) in International Silver Plate Final

• 1st Runner-up (Small Boat) in Ngong Ping 360 Inter-Company Championship

The 23rd Inter-Hong Lawn Bowls Tournament

• Championship

The 30th Inter-Hong Table-Tennis Tournament

• 2nd Runner-up

The 4th Inter-Hong Photo Contest

• 3rd Runner-up & Achievement Award

2010 Outstanding Apprentice and Trainee Award Scheme

• Certificate of Merit

Summary of Statistics

1 For Hong Kong business.2 For power generation only.3 Fuel oil is mainly used for starting and flame stabilisation of coal fired units and

hence, specific breakdown for fuel oil is not given.4 The methodology used for calculation is drawn from the Revised 1996 IPCC

(Intergovernmental Panel on Climate Change) Guidelines for National Greenhouse Gas Inventories.

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Economic

2011 2010 2009

Net assets (HK$ million) 57,873 56,137 52,144

Turnover (HK$ million) 10,201 10,371 10,395

Profit for the year (HK$ million) 9,075 7,194 6,697

Earnings per share (HK$) 4.25 3.37 3.14

Dividends per share (HK$) 2.32 2.11 2.11

Health & Safety1

2011 2010 2009Number of fatalities 0 0 0

Number of disabling injuries 5 8 2

Disabling Injury Frequency Rate (DIFR) (per 200,000 employee-hours)

0.23 0.36 0.09

Numbers of days lost/charged (no. of employee-days) 364 183 85

Disabling Injury Severity Rate (DISR) (per 200,000 employee-hours)

16.5 8.3 3.8

Longest period without a lost-time injury (no. of days) 132 108 298

Number of reported traffic accidents (no. of cases) 5 10 8

Traffic Accident Frequency Rate (TAFR) (no. of cases per million km travelled)

2.3 4.3 3.3

Number of OHSAS 18001 certificates 3 3 2

Operation1

2011 2010 2009

Number of CustomersNumber of customers (thousands)

567 566 564

Customer Satisfaction IndicesAverage rating of satisfaction level (maximum mark for each index is 5.0)

4.4 4.4 4.4

Performance PledgesNumber of performance pledges

18 18 18

Percentage achieved (%) 100 100 100

Installed Capacity (MW)Gas 680 680 680

Coal & oil3 3,055 3,055 3,055

Renewable energy 1.4 1.4 0.8

PerformancesTotal electricity sent out (GWh) 11,299 11,341 11,351

Thermal efficiency (%) 36.2 36.2 36.2

Plant availability (%) 84.4 85.6 83.4

Transmission and distribution losses (%)

3.6 3.6 3.8

ReliabilityElectricity supply reliability (%) >99.999 >99.999 >99.999

Unplanned customer minutes lost (minutes)

0.7 0.9 0.7

Certificate AccreditationNumber of ISO 9001 certificates

10 10 10

Number of HOKLAS certificates

3 3 3

Number of BSI PAS 55-1 certificates

1 1 1

Environment1

2011 2010 2009

Fuel Consumed (TJ)2

Gas 31,392 31,532 17,225

Coal & oil3 81,112 81,101 95,597

Licence CompliancePercentage of compliance (%) 100 100 100

Total Air EmissionsSO

2 (kT)2 4.20 5.49 17.0

NOx (kT)2 8.84 9.71 12.5

RSP (kT)2 0.21 0.24 0.39

CO2 (million T)2 8.60 8.62 9.13

CO2e (million T)4 8.63 8.65 9.15

Ash / Gypsum (kT)2

Ash produced 220 225 271

Ash sold for industrial uses 214 219 268

Gypsum sold for industrial uses 91 85 69

Waste Oils (litres)Waste oil recycled 106,600 133,000 155,200

Waste oil for disposal 1,236 600 9,600

Water Consumption / Discharge2

Marine water withdrawal & discharge (million m3)

2,112 2,127 2,077

Town water consumption (thousand m3)

2,261 2,347 1,714

Wastewater discharge (thousand m3)

248 238 231

Noise Abatement NoticeNumber of notices received 0 0 0

Certificate AccreditationNumber of ISO 14001 certificates 3 3 3