HK Electric to pursue investment overseas
Hongkong Electric Holdings has vowed to bolster overseas investments after its Australian portfolio fuelled 3.7 per cent growth in net profit to $6.28 billion last year.
The portfolio, comprising power distributors ETSA Utilities in South Australia, Powercor Australia in Victoria and CitiPower in Melbourne, generated a profit contribution of $820 million, 78.64 per cent higher than in 2003.
The strong growth helped offset a 1.76 per cent drop in profit to $5.52 billion from its home market - Hong Kong and Lamma islands - in which the utility had failed to earn permitted return for the consecutive second year.
'The relatively lower risk and predictable nature of our overseas businesses provide support for sustained profit growth,' chairman George Magnus said yesterday.
'We will continue to leverage on our existing resources and expertise to explore new business opportunities and concentrate on selected markets which offer stable returns with manageable risks.'
A spokeswoman pointed out that markets such as Australia, Europe and North America were particularly appealing to the utility.
However, overseas profit contribution accounted for only 12.08 per cent, or $759 million, of the group's total last year.
At home, Hongkong Electric failed to achieve a return between 13.5 and 15 per cent of its net average assets in use as stipulated under the scheme of control.
Poor sales arising from a cooler summer compounded by a depleted development fund caused an estimated $600 million shortfall in scheme of control earnings last year, a European analyst said.
The development fund, a consumer-owned cash reserve aimed at cushioning any shortfall in scheme of control earnings, ran out last year. The problem was exacerbated by a lower than expected 1.7 per cent rise in electricity consumption due to cooler weather in July and August.
In addition, the comparison base of operating profit in 2003 was inflated by a non-recurring gain of $351 million largely from disposals of staff quarters.
Last year, there was a $30 million non-recurring gain from fixed asset disposals.
Earnings per share were up 3.52 per cent at $2.94. A final dividend of $1.19 a share was proposed, bringing the full-year payout to $1.77.