Last year's strong set of earnings for CLP Holdings masked uncertainties over its future growth. The near 26 per cent jump in net earnings to HK$7.25 billion beat the average of analysts' forecast of HK$6.8 billion and came on the back of a 2.2 per cent lift in turnover. Ironically, the earnings growth was propelled by what CLP management described as a non-recurring item - property development. It jumped a year-on-year 30 per cent to HK$1.46 billion, accounting for almost 25 per cent of net earnings. The bulk of the earnings came from the regulated, core electricity supply business, which showed stable growth due largely to a mandated return of 15 per cent on its fixed assets. With the property contribution estimated to dwindle substantially to HK$600 million this year, concerns arise on what will support earnings growth. Conceding the company could not rely on selling apartments in future, CLP managing director and chief executive Andrew Brandler is looking at developing more power projects outside Hong Kong. Areas of focus would be mainly projects in China, Australia and Taiwan, he said. CLP's hopes of possible earnings contribution from the telecommunications operation were dashed, as punishing competition and the dominance of incumbents made the new entrant virtually commercially unviable. 'We were a bit over-optimistic when entering the telecoms business but that was how the general mood was two years ago,' Mr Brandler said. An urgent review of CLP Telecommunications is under way, which Mr Brandler said included options of shutdown and mergers. Last year's larger operating and development costs in Internet access services, and the aborted pay-television business, meant losses at the telecoms arm ballooned to HK$192 million, from HK$78 million in 2000. Diversification from its core Hong Kong electricity supply, with its capped return, is part and parcel of efforts by CLP and counterpart Hongkong Electric Holdings to grow profits. But some external electricity supply activities did not do well last year. Its Yallourn power plant in Australia accounted for most of the HK$318 million Asia-Pacific region electricity loss - the result of a protracted labour dispute and lower contracted on-grid tariffs. The loss offset the 27 per cent growth in CLP's profit from its Guangdong nuclear plant, to HK$700 million, and the HK$122 million profit from its other mainland power plants. 'We are looking at an even better year in China on the back of higher tariffs to be implemented and opportunities arising from the power reform,' Mr Brandler said. CLP was on target to see a third of group earnings coming from non-core business by 2005.