Reporting Objectives

Power Assets Holdings Limited (Power Assets) (formerly Hongkong Electric Holdings Limited), the holding company of The Hongkong Electric Company, Limited (HK Electric), is firmly committed to sustainable development. As an international energy investor, Power Assets focuses not only on its electricity business in Hong Kong but has strategically explored power and utility investment opportunities in areas outside Hong Kong. We consider sustainability reporting to be one of the important platforms for stakeholder engagement. In the past, HK Electric's annual Social and Environmental Reports summarised our commitment to a sustainable and harmonious Hong Kong. This year, we mark an important step in publishing our first annual Sustainability Report, which aims at providing a fair and balanced view with meaningful information about the sustainability activities of Power Assets and its subsidiaries with operational control.

Reporting Scope & Boundary

This report covers the environmental, social and economic commitments and performance of Power Assets in the calendar year of 2010. Expanding upon last year's Social and Environmental Report of HK Electric, this report includes the sustainability performance of Power Assets and its subsidiaries with operational control, resulting in an increase in reporting scope and boundary. The sustainability performance data on assets operated by those companies in which Power Assets does not have a controlling equity interest are therefore not included.

Information relating to early 2011 may also be included where appropriate and available. Numerical data are presented as absolute figures and all financial data are in Hong Kong Dollars, unless otherwise noted. Comparative data are also included where appropriate and practicable for comparison and demonstrating the trend(s) of certain indicators. Our Annual Report at www.powerassets.com provides greater detail on economic performance and operating information.

Reporting Principles

This report is prepared in accordance with the internationally recognised Global Reporting Initiative's (GRI) Third Generation (G3) Guidelines and the Electric Utility Sector Supplement. The GRI Application Table provides context for readers to understand the requirements of different Application Levels, and full information about GRI is available on the GRI website.

The GRI Content Index at the end of this report links up different performance indicators with relevant report content for easy reference. It is an indication of the comprehensiveness of our reporting approach and is a reflection of our transparency based on GRI indicators. Both the third-party independent verification and the GRI Application Level check of the report assure its credibility and fulfilment with GRI "A+" Application Level. Please refer to the Verification Statement section.

Materiality

Report content was selected based on GRI's principles and guidance. In preparing this report, we have also formalised and conducted a systematic stakeholder engagement exercise to identify significant issues that are relevant to stakeholders' concerns. Some key stakeholder dialogues can be found in the report. Materiality, based on applicability, degree of impact and risk, as well as stakeholder interest, was considered for each of the reporting elements.

Notes to Readers

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