A mild 4.6 per cent growth rate gave Hongkong Electric Holdings (HKE) a half-year profit of HK$2.02 billion to June 30, against HK$1.93 billion a year earlier. HKE, which sells electricity to Hong Kong and Lamma islands, said electricity sales for the half increased by 4.2 per cent year on year. Core earnings, derived from selling electricity under the Scheme of Control (SOC) agreement, is linked to the SAR's capital expenditure programme. The agreement allows the company to have a maximum return of 15 per cent on the money spent according to the capital expenditure plan. Analysts said the company's SOC earnings during the first half were flat compared with last year because the new HK$27 billion expenditure plan for the period from last year through to 2004 was approved by the Government only in late May. Net profit during the period was lifted by the contribution from South Australia's ETSA Utilities, which it acquired jointly with Cheung Kong Infrastructure (Holdings) in January. The company said earnings from ETSA exceeded projections. The earnings contribution was booked as other revenue and was the main factor behind the item soaring 3.7 times to HK$308 million from HK$83 million, a company official said. The company expects electricity sales for the year to grow by up to 5 per cent. Last month, maximum demand hit a new high of 2,417 megawatts, representing a growth rate of 3.2 per cent. The official said the company expected this year's maximum demand to be 4 per cent higher than last year's record. Alice Hui Suk-fong, head of regional utility at Prudential Bache, expects ETSA to contribute about HK$200 million to the company's full-year earnings. She expects its SOC capital expenditure to rise by about 5 per cent to HK$3.8 billion. This should enable it to have a 4 per cent to 5 per cent increase in SOC earnings with a similar improvement in net profit - to about HK$5.4 billion. Analysts said the power company's earnings growth would be more significant next year. Meanwhile, the company indicated it was pursuing a globalisation strategy, and its strong financial position would support it in its search for suitable investment opportunities worldwide.