Half Year Results
The unaudited consolidated profit of the Group, after taxation and Scheme of Control transfers, for the first six months of 2000 amounted to HK$2,026 million as summarised in the accompanying table. This represents an increase of 4.6% as compared with the same period last year.
The Directors have today declared an interim dividend of 54 cents per share payable to shareholders whose names appear in the Company's Register of Members on 29th September, 2000. This represents an increase of 4.1% in the total dividend paid out by the Company as compared with last year.
The Register of Members will be closed from 22nd September, 2000 to 29th September, 2000 both days inclusive. To qualify for the interim dividend, transfers should be lodged with the Registrars by 4:00 p.m. on 21st September, 2000.
Financial Plan approved
The 1999-2004 Financial Plan of The Hongkong Electric Company Limited (HEC) was approved by the Executive Council on 30th May 2000, after rigorous Government scrutiny. It calls for a site to be formed adjacent to the existing power station, the construction of a pipeline from Shenzhen to Lamma to transport the environmentally friendly natural gas fuel, and the commissioning of the first 300 MW unit in 2004; together with the extension of transmission and distribution facilities essential to support the growth in demand in our service area. The approved plan requires capital expenditure totalling $27 billion for the period 1999-2004, of which approximately 20% will be in respect of the Lamma Extension. The Company's commitment to the highest environmental standards will continue during both the construction and operation of the Lamma Extension. By using natural gas as the fuel to meet the future base load, significant improvements to the environment will be evident when the Lamma Extension is fully developed.
A series of measures have been agreed with Government to prevent surplus capacity and the Company is confident that these safeguards, together with HEC's past record of high forecast accuracy, will ensure that an over-capacity situation will not arise.
Electricity unit sales for the six months to 30th June 2000 increased by 4.2% over last year, with growth in excess of 7% being recorded in the domestic and industrial sectors, and 3.2% growth in commercial consumption. A new maximum demand of 2,417 MW has already been recorded in July, an increase of 3.2% over the maximum demand recorded last year, and we are optimistic that the maximum demand for the year will be in line with our forecast.
The Group continues to focus on efficiency and productivity to the maximum extent possible without compromising on the provision of reliable, environmentally friendly electricity and excellent customer service. These efforts have been largely responsible in enabling HEC to maintain its tariff to consumers for 2000 at the same level as in 1998.
The development of the new Kennedy Road Head Office and Control Building is proceeding on schedule and is expected to be ready for occupation towards the end of this year.
The performance of ETSA Utilities, the electricity distribution business in South Australia acquired in partnership with Cheung Kong Infrastructure Holdings Limited at the end of 1999 from the State government under a 200 year lease, has been satisfactory and the results have exceeded our original projections.
Electricity consumption is benefiting from the recovery of the economy and is back on track with our longer term forecasts. Not only does this augur well for the performance of the Group in the immediate future, but also clearly indicates the need for additional generating capacity in 2004. The Group recognises the need to proceed with the Lamma Extension without delay and looks forward to this important phase in the Group's development with great confidence.
Following the successful integration of ETSA Utilities into the Group, the recently announced acquisition of Powercor Australia Limited in Victoria for $10.65 billion by a joint venture company owned equally with Cheung Kong Infrastructure Holdings Limited, provides opportunities for potential synergies with ETSA Utilities in neighbouring South Australia.
The Group's strong financial position will support the continued worldwide search for suitable investment opportunities offering a satisfactory return as the Group pursues its globalization strategy, and I am optimistic about the Group's future prospects.
Hong Kong, 10th August 2000
Purchase, sale or redemption of shares
Neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company's issued shares during the period under review.
The unaudited consolidated profit and loss account for the period ended 30th June 2000 is set out below:
Six Months Ended 30th June 2000 1999 Summary of Results (HK$ Million) (HK$ Million) Turnover 4,487 4,320 Direct costs (1,691) (1,602) ------------ ------------ 2,796 2,718 Other revenue 308 83 Other operating costs (223) (199) Finance costs (480) (306) ------------ ------------ Operating profit 2,401 2,296 Share of profit of associate 1 3 ------------ ------------ Profit before taxation 2,402 2,299 Taxation : The Company and its subsidiaries (232) (194) Associate - 1 ------------ ------------ Profit after taxation 2,170 2,106 Scheme of Control transfers to: Development Fund (138) (161) Rate Reduction Reserve (6) (8) (144) (169) ------------ ------------ Profit attributable to shareholders 2,026 1,937 Interim Dividend (1,153) (1,108) ------------ ------------ Retained profit 873 829 ------------ ------------ Earnings Per Share 97 cents 96 cents Interim Dividend Per Share 54 cents 53.75 cents
|Notes:||1. Hong Kong Profits Tax has been provided at the rate of 16% (1999 - 16%) on estimated assessable profits.
2. The Scheme of Control transfers of HK$144 million are a mid year notional transfer. The actual Scheme of Control transfers will be determined at the year end when the final results are known.
3. 2000 earnings per share calculation is based on the weighted average number of 2,090,278,914 shares in issue during the period (1999 - 2,025,213,722 shares).
4. The presentation and classification of items in the consolidated profit and loss account has been changed due to the adoption of the requirements of SSAP1 (revised) "Presentation of financial statements". As a result, additional line items have been included in the face of the consolidated profit and loss account. Turnover for the period ended 30th June 1999 has also been reclassified to conform to the current year's presentation.
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