Investment Rating - The report maintains an "Outperform" rating for Power Assets Holdings [3][12]. Core Views - The performance in the first half of 2024 was in line with expectations, with a profit of HK$3.006 billion, a year-on-year increase of 2% [9][12]. - The UK segment showed strong growth, with profits of HK$1.55 billion, up 10.87% year-on-year, primarily due to lower financing costs from inflation-linked debts [10][11]. - The company plans to distribute a dividend of HK$0.78 per share, unchanged from the previous year [9][12]. Financial Performance - Revenue for 2024 is projected to be HK$1.371 billion, with a net profit forecast of HK$6.176 billion [4][12]. - The diluted EPS is expected to increase from HK$2.82 in 2023 to HK$2.90 in 2024 [4][8]. - The company’s gross margin remains stable at 100% across the forecast period [8]. Business Segments - The UK segment's profitability is attributed to companies like UK Power Network and Northern Gas Networks benefiting from reduced financing costs [10]. - The Australian segment reported a profit of HK$601 million, a year-on-year increase of 7.7% [10]. - The Canadian segment experienced a significant decline in revenue due to falling electricity prices [10][11]. Mergers and Acquisitions - The company has expanded its business segments through multiple mergers and acquisitions, including the acquisition of Phoenix Energy in Northern Ireland for HK$7.4 billion [11][12]. - UKPN acquired a 69MW solar power station, and the company plans to jointly acquire 32 wind farm assets in the UK with an estimated investment of HK$3.5 billion [11][12]. Valuation and Target Price - The target price is updated to HK$52.04, corresponding to a 16 times PE ratio for 2024 [12].

Financial Performance - Net profit attributable to shareholders for the first six months of 2024 was HKD 3,006 million, a 2% increase compared to HKD 2,959 million in the same period of 2023[1] - Earnings per share for the first six months of 2024 were HKD 1.41, compared to HKD 1.39 in the same period of 2023[1] - The company reported a profit attributable to shareholders of HKD 3.006 billion for the first six months of 2024, compared to HKD 2.959 billion in the same period in 2023[26] - Basic and diluted earnings per share for the first six months of 2024 were HKD 1.41, up from HKD 1.39 in the same period in 2023[26] - The company's profit attributable to shareholders for the first half of 2024 was HK$3,006 million, a slight increase from HK$2,959 million in the same period last year[27] - Total comprehensive income attributable to shareholders for the first half of 2024 was HK$2,159 million, a significant decrease from HK$5,783 million in the same period last year[27] - Profit before tax for the group increased to HKD 3,134 million in 2024 from HKD 3,061 million in 2023, driven by higher contributions from joint ventures and associates[34] - Earnings per share (EPS) rose to HKD 1.44 in 2024 from HKD 1.39 in 2023, based on a net profit of HKD 3,060 million and 2,131,105,154 shares outstanding[38] - Pre-tax profit for the first half of 2024 was HKD 3,134 million, up from HKD 3,061 million in the same period of 2023[42] Dividends and Shareholder Returns - The interim dividend per share remains unchanged at HKD 0.78, to be paid on September 24, 2024[9] - The company declared an interim dividend of HKD 0.78 per share, totaling HKD 1,662 million for the six months ended June 30, 2024[50] - The company paid dividends of HK$4,348 million to shareholders in the first half of 2024, consistent with the amount paid in the same period last year[30] - The company declared an interim dividend of HKD 0.78 per share for 2024, payable on September 24, 2024[76] Debt and Financial Position - The company's net debt to total capital ratio is 2%, with a net debt to total capital ratio of 45% on a pro-rata basis for international investment portfolio[11] - The company's unsecured bank loans totaled HKD 2.863 billion as of June 30, 2024, a decrease from HKD 3.097 billion as of December 31, 2023[21] - The company's bank deposits and cash stood at HKD 1.48 billion as of June 30, 2024, down from HKD 4.201 billion as of December 31, 2023[21] - The company's net debt position was HKD 1.383 billion as of June 30, 2024, compared to a net cash position of HKD 1.104 billion as of December 31, 2023[22] - The company's net debt to total capital ratio was 2% as of June 30, 2024, compared to no net debt as of December 31, 2023[22] - The company's net assets as of June 30, 2024, were HK$86,563 million, down from HK$88,752 million at the end of 2023[28] - The company's total assets less current liabilities were HK$89,917 million as of June 30, 2024, down from HK$92,453 million at the end of 2023[28] - The company's non-current assets increased slightly to HK$91,558 million as of June 30, 2024, compared to HK$91,343 million at the end of 2023[28] - The company's current liabilities exceeded current assets by HK$1,641 million as of June 30, 2024, compared to a net current asset position of HK$1,110 million at the end of 2023[28] - Bank deposits and cash decreased to HKD 1,480 million as of June 30, 2024, from HKD 4,201 million at the end of 2023[41] Investments and Acquisitions - The company completed the acquisition of two UK low-carbon energy businesses, including a 20% stake in Phoenix Energy and the acquisition of UU Solar through UKPN[10] - The company, along with Cheung Kong Infrastructure and Cheung Kong Holdings, formed a consortium to acquire a UK onshore wind asset portfolio for approximately £350 million (HKD 3.5 billion), marking the company's third acquisition in 2024[18] - The acquired wind asset portfolio includes 32 wind farms across England, Scotland, and Wales, with a total installed capacity of 175 MW and a net equity capacity of 137 MW[18] - The company, along with Cheung Kong Infrastructure Holdings Limited and Cheung Kong (Holdings) Limited, agreed to acquire a UK onshore wind portfolio for approximately GBP 350 million (approximately HKD 3.5 billion). The portfolio includes 32 wind farms with a total installed capacity of 175 MW and a net equity installed capacity of 137 MW[54] Renewable Energy and Sustainability - The company's renewable energy portfolio in the UK includes 70 projects, with 90% of revenue coming from long-term contracts and government renewable energy subsidies[10] - Australian Gas Networks is progressing with the HyP Murray Valley hydrogen project, aiming to blend 10% hydrogen into the gas network for 40,000 homes and businesses[13] - NGN's HyDeploy22 project in the UK is supplying hydrogen-blended gas to 668 customers, supporting the net-zero transition[17] - The Sustainability Committee is chaired by the CEO and oversees the development and implementation of sustainability measures[64][65] Operational Performance - UKPN achieved a profit contribution of HKD 1.55 billion (2023: HKD 1.398 billion) in the UK market, with a customer satisfaction rate of 94.3% in 2024[12] - Australia operations contributed HKD 601 million in profit (2023: HKD 558 million), driven by strong growth in energy usage from residential and commercial customers[13] - Victoria Power Networks initiated the first phase of a major power upgrade in Melbourne to meet increased electricity demand due to population growth and EV adoption[13] - Hong Kong Electric's electricity sales increased by 1.8% year-on-year, driven by warmer weather and an extra day in February 2024[15] - Hong Kong Electric launched a new HKD 22 billion development plan (2024-2028), including a new 380 MW gas-fired combined cycle unit and grid modernization projects[15] - The proportion of natural gas in Hong Kong Electric's power generation increased to approximately 70% with the commissioning of the L12 unit in March 2024[16] - Dampier Bunbury Pipelines achieved a compressor station reliability of 99.96%, exceeding the 99% target[13] - EDL is advancing renewable and hybrid energy projects, including upgrades to Limestone and Lorain renewable gas plants and the first phase of the Agnew plant expansion[13] Financial Derivatives and Fair Value - Financial derivative assets increased to HKD 1,771 million as of June 30, 2024, from HKD 1,545 million at the end of 2023[44] - Fair value of financial derivatives classified as Level 2 increased to HKD 1,771 million as of June 30, 2024, from HKD 1,545 million at the end of 2023[46] - Fair value of forward foreign exchange contracts increased to HKD 1,153 million as of June 30, 2024, from HKD 1,060 million at the end of 2023[46] - Fair value of cross-currency swap contracts increased to HKD 589 million as of June 30, 2024, from HKD 443 million at the end of 2023[46] Corporate Governance and Committees - All directors confirmed compliance with the standard code of conduct for securities transactions as of June 30, 2024[58] - Audit Committee reviewed the unaudited consolidated financial statements for the six months ended June 30, 2024[61] - Audit Committee confirmed the effectiveness and adequacy of the risk management and internal control systems as of June 30, 2024[66] - The Audit Committee consists of 3 independent non-executive directors, chaired by Mr. Yip Yuk Keung[61] - The Nomination Committee is responsible for reviewing the board's structure, size, diversity, and talent mix[62] - The Remuneration Committee oversees the company's director and management team compensation policies[63] - The company shares internal audit functions with its associate company, HK Electric Investments Limited[66] - Internal audit functions cover financial, operational, IT reviews, fraud investigations, and compliance audits[66] - The internal audit team includes professionals from accounting, engineering, and IT fields[66] - The company has established a shareholder communication policy to facilitate effective communication through various channels, including annual general meetings, financial results, annual reports, and investor briefings[67] Shareholder and Ownership Structure - As of June 30, 2024, the company's directors and senior executives hold interests in the company's shares, related shares, and bonds, with details recorded in the company's register[68] - Beneficial owners hold 180,000 shares, representing approximately 0.01% of the company's issued shares as of June 30, 2024[69] - Li Ka-shing holds 7,870,000 share stapled units through controlled companies and trusts, representing approximately 0.08% of the issued share stapled units[70] - The Li Ka-shing Foundation holds share stapled units in HK Electric Investments and HK Electric Investments Limited, with Li Ka-shing potentially controlling one-third or more of the voting rights[71] - Li Ka-shing is deemed to have an interest in share stapled units held by TUT1 as trustee of UT1, as he is a potential beneficiary of DT1 and DT2[72] - Major shareholders include Venniton Development Inc. (7.22%), Interman Development Inc. (8.76%), Univest Equity S.A. (13.09%), and Monitor Equities S.A. (13.48%)[74] - Hyford Limited, CK Hutchison Holdings Limited, and CK Hutchison Global Investments Limited each hold 767,499,612 shares, representing 36.01% of the company's issued shares[74] - Hyford Limited holds 767,499,612 shares of the company, representing a significant portion of the issued shares[75] Cash Flow and Capital Commitments - Cash and cash equivalents decreased by HK$1,009 million in the first half of 2024, compared to a decrease of HK$1,276 million in the same period last year[30] - The company's net cash inflow from operating activities was HK$179 million in the first half of 2024, down from HK$613 million in the same period last year[30] - Net cash inflow from investing activities was HK$3,316 million in the first half of 2024, up from HK$2,459 million in the same period last year[30] - Cash flow from operating activities decreased to HKD 179 million in the first half of 2024, compared to HKD 613 million in the same period of 2023[43] - Dividends received from joint ventures increased to HKD 1,386 million in the first half of 2024, up from HKD 1,049 million in the same period of 2023[43] - The company has capital commitments of HKD 1 million for property, plant, and equipment as of June 30, 2024[51] - The company provided guarantees amounting to HKD 68 million for joint ventures as of June 30, 2024[51] Interest Income and Financial Costs - Interest income declined to HKD 454 million in 2024 from HKD 662 million in 2023, reflecting lower returns from financial assets[35] - The company earned interest income of HKD 384 million from loans to joint ventures for the six months ended June 30, 2024[52] - The company earned interest income of HKD 70 million from loans to associates for the six months ended June 30, 2024[53] - Financial costs for the period remained stable at HKD 80 million in 2024, consistent with HKD 76 million in 2023, as the group maintained its debt structure[36] Tax and Other Expenses - Tax expenses for the period increased to HKD 128 million in 2024 compared to HKD 102 million in 2023, mainly due to higher current tax provisions[37] - The company's total employee compensation expenses for the first six months of 2024 were HKD 14 million, up from HKD 13 million in the same period in 2023[25] Joint Ventures and Associates - The group's share of profits from joint ventures and associates increased to HKD 2,725 million in 2024 from HKD 2,387 million in 2023, reflecting improved performance in key markets[34] - Joint venture equity increased to HKD 61,946 million as of June 30, 2024, compared to HKD 61,669 million at the end of 2023[40] - The company received service fees of HKD 22 million from an associate for the six months ended June 30, 2024[53] Market Capitalization and Credit Rating - The company's market capitalization as of June 30, 2024, was HKD 90.039 billion[7] - The company's credit rating was reaffirmed by Standard & Poor's as "A/Stable"[11] Property, Plant, and Equipment - Property, plant, and equipment (PPE) net book value decreased to HKD 17 million in 2024 from HKD 19 million in 2023, primarily due to depreciation charges[39] Share Repurchase and Redemption - No repurchase, sale, or redemption of the company's listed securities occurred in the first half of 2024[77] Consolidated Financial Position of Affiliated Companies - The consolidated financial position of affiliated companies as of June 30, 2024, shows non-current assets of HKD 400,709 million and current assets of HKD 23,630 million[79] - The group's combined attributable interests in affiliated companies amounted to HKD 54.256 billion as of June 30, 2024[79] Revenue and Segment Performance - Revenue from reportable business segments decreased to HKD 454 million in 2024 from HKD 662 million in 2023, primarily due to lower income from investments in the UK and Australia[34] - The UK segment contributed HKD 1,550 million to the group's profit in 2024, up from HKD 1,398 million in 2023, driven by strong performance in joint ventures[34] - The Australia segment's profit decreased to HKD 601 million in 2024 from HKD 558 million in 2023, impacted by higher financial costs[34] Valuation of Non-Listed Equity Securities - The company's non-listed equity securities are valued using a dividend discount model, with a cost of capital of 13.65%. A 0.5% increase or decrease in the cost of capital would result in a change in the group's profit and reserve of approximately HKD 13 million to HKD 14 million[48]

Financial Performance - The group's unaudited profit for the six months ended June 30, 2024, was HKD 3.0606 billion, a 2% increase from HKD 2.959 billion in 2023[2]. - The group reported a profit attributable to shareholders of HKD 3,006 million for the six months ended June 30, 2024, compared to HKD 2,959 million in 2023, reflecting a slight increase of 1.6%[19]. - Total comprehensive income attributable to shareholders for the same period was HKD 2,159 million, a significant decrease from HKD 5,783 million in 2023, reflecting a decline of 62.6%[20]. - The group's operating profit for the same period was HKD 489 million, down from HKD 750 million in 2023, indicating a decrease of about 34.7%[19]. - The pre-tax profit for the six months ended June 30, 2024, was 3,134 million, compared to 3,061 million in the same period of 2023, showing a slight increase of about 2.4%[28]. - The income tax expense for the six months ended June 30, 2024, was 128 million, up from 102 million in the same period of 2023, representing an increase of approximately 25.5%[29]. - The earnings per share for the six months ended June 30, 2024, was 3.06 billion, compared to 2.95 billion in the same period of 2023, reflecting an increase of about 3.7%[30]. Dividends - The interim dividend declared is HKD 0.78 per share, unchanged from 2023[3]. - The company declared an interim dividend of HKD 1,662 million for the period, consistent with the previous year[22]. - The interim dividend declared was 1,662 million for the six months ended June 30, 2024, unchanged from the same period in 2023[33]. Business Segments - The UK business contributed HKD 1.550 billion in profit, up from HKD 1.398 billion in 2023, despite new price controls[6]. - The Australian business generated HKD 610 million in profit, an increase from HKD 558 million in 2023, driven by strong energy usage growth[7]. - The Hong Kong business saw a 1.8% increase in electricity sales, attributed to warmer weather and an extra day in February due to the leap year[10]. Investments and Acquisitions - The group acquired a 20% stake in Phoenix Energy, Northern Ireland's largest gas network, providing stable income and significant carbon reduction potential[4]. - The group has agreed to acquire a portfolio of onshore wind assets in the UK for approximately £350 million (around HKD 3.5 billion), which includes 32 wind farms with a total installed capacity of 175 MW and a net equity capacity of 137 MW[12]. - The group plans to invest HKD 22 billion in the 2024-2028 development plan, including the construction of a new gas combined cycle generator[10]. Financial Position - The group maintains a strong financial foundation with a net debt to total capital ratio of 2%, indicating low leverage[5]. - The net debt level as of June 30, 2024, was HKD 1,383 million, compared to a net cash position of HKD 1,140 million at the end of 2023, resulting in a net debt to total equity ratio of 2%[15]. - The group's total bank loans as of June 30, 2024, amounted to HKD 2,863 million, down from HKD 3,097 million at the end of 2023[14]. - The company’s cash and cash equivalents decreased to HKD 1,480 million from HKD 4,201 million, a decline of 64.8%[21]. - The company's non-current assets amounted to HKD 91,558 million as of June 30, 2024, slightly up from HKD 91,343 million at the end of 2023[21]. - The net asset value as of June 30, 2024, was HKD 86,563 million, down from HKD 88,752 million at the end of 2023, a decrease of 2.5%[21]. - Current liabilities increased to HKD 3,199 million from HKD 3,249 million, indicating a reduction of 1.5%[21]. Credit Rating and Governance - The group’s credit rating is confirmed as "A/stable" by Standard & Poor's, reflecting its robust financial strength[5]. - The group’s financial position remains strong, with a long-term credit rating of "A" reaffirmed by Standard & Poor's, maintaining a stable outlook since September 2018[15]. - The company has complied with the corporate governance code as per the Hong Kong Stock Exchange Listing Rules during the six months ended June 30, 2024[36]. - All directors confirmed compliance with the standard code of conduct for securities trading during the six months ended June 30, 2024[37]. - The board consists of two executive directors, two non-executive directors, and five independent non-executive directors as of the announcement date[38]. Operational Challenges - For the six months ended June 30, 2024, the group's revenue was HKD 454 million, a decrease from HKD 662 million in the same period of 2023, representing a decline of approximately 31.5%[19]. - The group has invested in enhancing system resilience against extreme weather, including flood monitoring systems for power facilities[11]. - The company reported a foreign exchange loss of HKD 926 million from operations outside Hong Kong, compared to a gain of HKD 2,551 million in the previous year[20]. - The company's employee compensation for the six months ended June 30, 2024, totaled HKD 14 million, an increase from HKD 13 million in 2023[18].

Financial Performance - The audited profit attributable to shareholders for 2023 was HKD 6,003 million, a 6% increase from HKD 5,649 million in 2022[11]. - Earnings per share for 2023 was HKD 2.82, compared to HKD 2.65 in 2022[4]. - Total equity increased to HKD 88,752 million in 2023 from HKD 86,857 million in 2022[4]. - The group maintained a cash balance of HKD 4,201 million, down from HKD 5,894 million in the previous year[4]. - The company plans to distribute a final dividend of HKD 2.04 per share, maintaining the same level as in 2022[12]. - The group maintains a strong financial foundation, with a net cash position supporting an S&P A credit rating[20]. - The group has a strong capital position, with a long-term credit rating of "A" from S&P since 2018, allowing for flexible operations and timely investment opportunities[25]. - The group’s equity in joint ventures and associates at year-end was HKD 88.697 billion, up from HKD 84.636 billion in 2022[187]. - The total unsecured bank loans at year-end amounted to HKD 3.097 billion, a decrease from HKD 3.236 billion in 2022[187]. - Cash and bank deposits at year-end were HKD 4.210 billion, down from HKD 5.894 billion in 2022[187]. - The net cash level as of December 31, 2023, was HKD 1.114 billion, compared to HKD 2.658 billion in 2022[187]. Operational Highlights - The group operates a network of 503,100 kilometers for electricity, gas, and oil pipelines, serving approximately 19.8 million residential and commercial customers globally[2]. - The group has invested in approximately 9,700 megawatts of power generation facilities[2]. - The company operates global investment projects across four continents in energy production and distribution, serving millions of users[22]. - The company focuses on investing in renewable energy, waste-to-energy, and gas infrastructure to achieve long-term profit growth[22]. - The company is modernizing its power grid to accommodate the increasing demand for distributed renewable energy and electric vehicle charging[23]. - The company is replacing 164 kilometers of cast iron and unprotected steel pipelines with polyethylene pipelines to enhance safety and customer service[27]. - The company is constructing Australia's first city-wide renewable hydrogen blending energy project, benefiting nearly 800 households and businesses[27]. Sustainability and Environmental Initiatives - The company is focused on transitioning to green energy, which is critical for achieving global carbon neutrality goals[2]. - The group is committed to achieving net-zero carbon emissions by 2050, with all operating companies in OECD member countries making this commitment[19]. - The group is actively exploring greener fuel alternatives, such as hydrogen and biofuels, with pilot programs supported by local governments in the UK and Australia[19]. - The company is actively participating in climate change initiatives, supporting government decarbonization goals through strategic investments in smart meters and emission-reducing technologies[23]. - The company has invested in a 240 MW solar power station, employing over 30 local indigenous workers as part of its community engagement program[26]. - The group has implemented a long-term plan to address climate change risks, aiming for net-zero emissions by 2050, with specific measures to reduce greenhouse gas emissions through its power generation business[178]. - The group has completed a TCFD scenario analysis in 2023 to identify and assess physical and transition risks related to climate change, with findings detailed in the 2023 sustainability report[178]. Regional Performance - The UK business contributed HKD 2.88 billion in profit for 2023, up from HKD 2.517 billion in 2022, despite inflationary pressures[14]. - Australian operations generated HKD 1.265 billion in profit, down from HKD 1.342 billion in the previous year, maintaining stable performance despite currency fluctuations[16]. - The Canadian business provided stable profit contributions, focusing on long-term contracts for reliable operations[17]. - UK Power Networks (UKPN) serves 14 million residential and commercial customers in the UK, maintaining strong performance under regulatory plans and long-term purchase contracts[31]. - UKPN delivered 71.459 billion kilowatt-hours of electricity, accounting for 28% of the UK's total distribution, with peak demand reaching 13,466 megawatts[33]. - The group has expanded its operations in Australia since 2000, now serving approximately 5 million residential and commercial customers in renewable energy, generation, and distribution sectors[41]. Corporate Governance and Management - The company has adhered to the corporate governance code as per the Hong Kong Stock Exchange's listing rules throughout the fiscal year ending December 31, 2023[85]. - The board of directors is dedicated to maintaining high levels of corporate governance to attract investors and protect shareholder interests[85]. - The company has established an Environmental, Social, and Governance (ESG) committee to strengthen sustainability efforts in response to changing carbon emission regulations in Canada[65]. - The board currently consists of 5 executive directors, 2 non-executive directors, and 5 independent non-executive directors, meeting the requirement that independent non-executive directors account for at least one-third of the total board members[89]. - The company has established procedures for directors to seek independent professional advice at the company's expense when necessary[90]. - The board's performance evaluation for 2023 was conducted, and the results were reviewed in March 2024, indicating that the board and its committees are operating effectively[96]. Risk Management - The group has established an enterprise risk management framework to effectively identify, assess, mitigate, and monitor key business, financial, operational, and compliance risks[169]. - The board and audit committee are responsible for overseeing the risk management and internal control systems, ensuring alignment with strategic and business objectives[171]. - The group’s risk management procedures involve regular reviews and updates to the risk register, ensuring that significant risks are monitored and managed effectively[176]. - The group actively monitors changes in government policies and regulations to mitigate operational and capital expenditure risks[184]. - The group conducts rigorous due diligence and detailed analysis before any mergers or acquisitions to manage associated risks[182]. Shareholder Engagement - The company has established a shareholder communication policy to facilitate effective communication with shareholders and investors[151]. - The annual general meeting was held in a hybrid format, allowing shareholders to participate either in person or online[152]. - The company declared a final dividend of HKD 2.04 per share, receiving 99.7122% approval at the annual general meeting[152]. - Major shareholders include Hyford Limited, which holds 767,499,612 shares, representing 36.01% of the total equity[158]. - The company encourages shareholders to access communications via its website to support environmental sustainability[155].

Investment Rating - The report maintains an "Outperform" rating for Power Assets Holdings [3][5]. Core Insights - The UK segment shows strong performance, contributing significantly to the company's profits, while the Australian segment's profitability is affected by exchange rate fluctuations [9][11]. - The company reported a net profit attributable to shareholders of HKD 6.003 billion for 2023, a 6% year-on-year increase, with dividends of HKD 2.82 per share, resulting in a dividend yield of 6.23% [4][9]. - The target price is updated to HKD 52.04, reflecting a 21% increase from the previous DCF valuation [5][13]. Financial Performance - The company's revenue for 2023 was HKD 1.292 billion, with a projected increase to HKD 1.371 billion in 2024 [4][8]. - Net profit forecasts for 2024, 2025, and 2026 are HKD 6.176 billion, HKD 6.338 billion, and HKD 6.510 billion respectively [5][13]. - The UK segment's profit contribution was HKD 2.808 billion, an 11.56% increase year-on-year, while the Australian segment contributed HKD 1.265 billion, down 5.74% [9][11]. Asset and Investment Overview - As of the end of 2023, the net assets attributable to the UK segment were HKD 41.733 billion, while the Australian segment's net assets were HKD 18.18 billion [10][11]. - The company plans to invest approximately HKD 22 billion from 2024 to 2028 to enhance its natural gas power generation capacity [12]. Market Position and Strategy - The report highlights the stability of the electricity grid and gas distribution businesses, with the UK segment being the primary profit contributor [10][12]. - The company is expected to maintain a high dividend payout ratio, close to 100%, as it relies on cash flows from joint ventures and interest income [5][13].

Financial Performance - The group reported a net profit attributable to shareholders of HKD 6.03 billion for 2023, representing a 6% increase from HKD 5.64 billion in 2022[2]. - The company’s profit attributable to shareholders for the year ended December 31, 2023, was HKD 6,003 million, an increase of 6.2% from HKD 5,649 million in 2022[21]. - Total comprehensive income attributable to shareholders for the year was HKD 7,904 million, up 27% from HKD 6,230 million in the previous year[21]. - The pre-tax profit for 2023 was 6,252 million, up from 5,838 million in 2022, representing an increase of approximately 7.1%[28]. - The operating profit for the group was HKD 1,131 million in 2023, slightly down from HKD 1,164 million in 2022, indicating a decrease of about 2.8%[19]. - The reported segment revenue for the year ended December 31, 2023, was 1,292 million, compared to 1,265 million in 2022, reflecting a growth of approximately 2.1%[26]. Dividends - The proposed final dividend is HKD 2.04 per share, maintaining the same level as 2022, resulting in a total annual dividend of HKD 2.82 per share[3]. - The mid-term dividend declared per ordinary share remained stable at HKD 0.78 in both 2023 and 2022, with total mid-term dividends of HKD 1,662 million in 2023 compared to HKD 1,665 million in 2022[33]. - The proposed final dividend per ordinary share is HKD 2.04 for 2023, slightly up from HKD 2.04 in 2022, with total proposed final dividends of HKD 4,348 million in 2023 compared to HKD 4,347 million in 2022[33]. Operational Highlights - The UK operations contributed HKD 2.808 billion in profit, up from HKD 2.517 billion in 2022, demonstrating resilience despite inflationary pressures[4]. - The Australian operations generated a profit of HKD 1.265 billion, down from HKD 1.342 billion in 2022, with stable performance despite a weak AUD[5]. - The Victoria Power Networks launched a new technology to address bushfire risks, enhancing grid reliability across over 17,000 kilometers of cables[6]. - The group is actively investing in smart grid technology across global markets, enhancing energy efficiency and grid stability[10]. - The group is exploring environmentally friendly fuels, such as hydrogen and biofuels, with pilot programs supported by local governments in the UK and Australia[10]. - The group aims to integrate sustainable development goals into its business strategy, collaborating with various stakeholders to promote green energy alternatives[10]. Financial Position - The net cash position of the group as of December 31, 2023, was HKD 1,140 million, a decrease from HKD 2,658 million in 2022, showing a decline of about 57.3%[14]. - The group maintained a strong financial foundation, with a credit rating of A from Standard & Poor's, reaffirmed in February 2023[15]. - The group’s total liabilities from bank loans amounted to HKD 3,097 million as of December 31, 2023, down from HKD 3,236 million in 2022, indicating a reduction of approximately 4.3%[15]. - The company reported a net current asset position of HKD 1,110 million in 2023, down from HKD 2,842 million in 2022, a decrease of 60.9%[22]. - The company's cash and cash equivalents decreased to HKD 4,201 million in 2023 from HKD 5,894 million in 2022, a decline of 28.7%[22]. - The total liabilities decreased to HKD 3,701 million in 2023 from HKD 3,632 million in 2022, showing a slight increase of 1.9%[22]. Investments and Future Plans - The group plans to invest HKD 22 billion in the 2024-2028 development plan to further strengthen its decarbonization strategy[8]. - The Hong Kong business completed a development plan with a total investment of HKD 26.6 billion, including the construction of three gas-fired generating units[8]. - The group aims to achieve net-zero carbon emissions by 2050 across all operating companies in OECD member countries[9]. Governance and Compliance - The company maintained compliance with the corporate governance code throughout the year ending December 31, 2023, ensuring transparency and accountability[35]. - The company has not repurchased, sold, or redeemed any of its listed securities during the year[35]. - The board of directors consists of six executive directors, two non-executive directors, and five independent non-executive directors, ensuring a diverse governance structure[38]. - The annual general meeting is scheduled for May 22, 2024, to discuss shareholder matters[37]. Joint Ventures and Associates - The group’s share of results from joint ventures increased significantly to HKD 3,582 million in 2023, up from HKD 2,994 million in 2022, representing a growth of approximately 19.6%[19]. - The equity in joint ventures increased to HKD 61,669 million in 2023 from HKD 57,331 million in 2022, reflecting a growth of 7.5%[22]. - The equity in associates rose slightly to HKD 27,028 million in 2023 compared to HKD 27,305 million in 2022, indicating a decrease of 1%[22]. - The net asset value of non-listed joint ventures increased to HKD 52,079 million in 2023 from HKD 45,759 million in 2022, representing a growth of 14.4%[31]. - The total assets attributable to non-listed joint ventures rose to HKD 146,620 million in 2023, up from HKD 132,482 million in 2022, marking an increase of 10.7%[31].

Financial Performance - The company's unaudited profit attributable to shareholders for the six months ended June 30, 2023, was HKD 2,959 million, an increase from HKD 2,871 million in the same period of 2022, representing a growth of approximately 3.1%[2] - Earnings per share for the period was HKD 1.39, compared to HKD 1.35 in the previous year, reflecting a year-on-year increase of about 2.96%[2] - The group reported a revenue of HKD 662 million for the six months ended June 30, 2023, compared to HKD 598 million for the same period in 2022, representing an increase of 10.7%[22] - Operating profit for the same period was HKD 750 million, up from HKD 571 million in 2022, reflecting a growth of 31.4%[22] - The group’s profit before tax for the six months ended June 30, 2023, was HKD 3,061 million, compared to HKD 2,969 million for the same period in 2022, reflecting a 3.1% increase[32] - The total comprehensive income for the six months ended June 30, 2023, was HKD 5,783 million, compared to HKD 4,347 million for the same period in 2022, representing a 33.1% increase[25] Dividends - The interim dividend declared is HKD 0.78 per share, unchanged from the previous year[8] - The company declared an interim dividend of HKD 1,662 million for the six months ended June 30, 2023, compared to HKD 1,665 million for the same period in 2022, reflecting a slight decrease of 0.2%[25] - The interim dividend for the year 2023 is declared at HKD 0.78 per share, payable on September 12, 2023[71] Operational Highlights - The UK operations contributed HKD 1,398 million to profit, down from HKD 1,433 million in 2022, impacted by regulatory resets and rising financing costs[9] - In Hong Kong, the profit contribution from Power Assets' operations was HKD 328 million, up from HKD 298 million in 2022, driven by a 3% increase in electricity sales[10] - The new liquefied natural gas receiving terminal in Hong Kong commenced commercial operations in July 2023, with a storage capacity of 263,000 cubic meters[10] - The group is enhancing network capacity to accommodate large-scale solar power trends, including the launch of a neighborhood battery project in Melbourne, providing power for up to 170 households for 3 hours during peak times[11] - The group’s gas operations are performing well, with the Dampier Bunbury Pipelines compressor station achieving a reliability rate of 99.61%[12] Investments and Financial Position - Capital expenditures and investments are primarily funded by cash generated from operations, with total unsecured bank loans amounting to HKD 3.269 billion as of June 30, 2023[17] - The group’s bank deposits and cash stood at HKD 3.970 billion as of June 30, 2023, down from HKD 5.894 billion at the end of 2022[17] - The group plans to seek suitable investment opportunities in stable and well-regulated energy markets to support long-term growth[16] - The group’s total assets less current liabilities amounted to HKD 92,035 million as of June 30, 2023, compared to HKD 90,489 million at the end of 2022[24] - The group’s total equity attributable to shareholders was HKD 88,293 million as of June 30, 2023, an increase from HKD 86,857 million on December 31, 2022[24] Sustainability and Regulatory Compliance - The company is in discussions with the government regarding the 2024-2028 development plan and the mid-term review of the current regulatory framework, aiming for long-term investment in decarbonization projects[10] - The group is focusing on sustainable development, including hydrogen integration in heating fuels, with projects in the UK and Australia aiming for significant hydrogen production by 2025[15] - The group is committed to supporting government initiatives for net-zero carbon targets and enhancing power networks to accommodate renewable energy[16] Corporate Governance - The board consists of 13 directors, including 6 executive directors, 2 non-executive directors, and 5 independent non-executive directors, complying with the requirement that independent non-executive directors represent at least one-third of the total board members[51] - The company has adhered to the corporate governance code as stipulated in the Hong Kong Stock Exchange Listing Rules for the six months ending June 30, 2023[50] - The company has established a whistleblowing procedure to handle reports of financial reporting, internal controls, or other misconduct[56] - The audit committee, composed of 3 independent non-executive directors, has reviewed the unaudited consolidated financial statements for the six months ending June 30, 2023[56] Shareholder Information - As of June 30, 2023, the company had a total of 2,131,105,154 shares issued, with significant shareholdings reported by directors and executives[64] - Major shareholders include Hyford Limited, holding 767,499,612 shares, representing 36.01% of the total equity[69] - The company has a shareholder communication policy to establish a framework for effective communication with shareholders and investors[62] - The company allows shareholders to request changes in the language version of communications, enhancing accessibility[62]

Financial Performance - The group's unaudited profit for the six months ended June 30, 2023, was HKD 2.959 billion, an increase from HKD 2.871 billion in 2022, reflecting strong core business performance despite rising global interest rates and currency fluctuations [2]. - The group reported a revenue of HKD 662 million for the six months ended June 30, 2023, compared to HKD 598 million in the same period of 2022, representing an increase of approximately 10.7% [18]. - Operating profit for the same period was HKD 750 million, up from HKD 571 million in 2022, indicating a growth of about 31.4% [18]. - The net profit attributable to shareholders for the six months ended June 30, 2023, was HKD 2,959 million, compared to HKD 2,871 million in 2022, reflecting an increase of approximately 3.1% [18]. - The comprehensive income attributable to shareholders for the six months ended June 30, 2023, was HKD 5,783 million, compared to HKD 4,347 million in 2022, an increase of approximately 32.9% [19]. - The pre-tax profit for the six months ended June 30, 2023, was HKD 2,589 million, up from HKD 2,491 million in the same period of 2022, reflecting a 3.9% increase [27]. - The income tax expense for the six months ended June 30, 2023, was HKD 102 million, compared to HKD 98 million in the same period of 2022, indicating a 4.1% increase [28]. - Earnings per share for the six months ended June 30, 2023, was HKD 2.95, slightly up from HKD 2.87 in the same period of 2022 [29]. Dividends - The interim dividend declared is HKD 0.78 per share, unchanged from 2022, to be distributed on September 12, 2023 [3]. - The interim dividend declared for the six months ended June 30, 2023, was HKD 1,662 million, consistent with HKD 1,665 million in the same period of 2022 [32]. Operational Highlights - The UK operations contributed HKD 1.398 billion in profit, down from HKD 1.433 billion in 2022, impacted by regulatory resets and rising financing costs [4]. - In Hong Kong, the profit contribution from Power Assets was HKD 328 million, up from HKD 298 million in 2022, with electricity sales increasing by 3% due to warmer weather and economic recovery [6]. - The Australian operations generated a profit of HKD 558 million, down from HKD 671 million in 2022, affected by regulatory resets and unfavorable exchange rates [7]. - The group has installed over 303,000 smart meters in Hong Kong, enhancing its advanced metering infrastructure [6]. - The operating profit for the reported segments was HKD 750 million, up from HKD 660 million, indicating a growth of approximately 13.6% [24]. Investments and Future Plans - The group is investing in a new 380 MW gas generation unit expected to be operational in early 2024, as part of its development plan [6]. - The group plans to replace cast iron and unprotected steel pipelines with polyethylene pipes to improve safety and reduce gas leakage [8]. - The group is collaborating on projects to transition 2,000 properties from gas heating to hydrogen heating by 2025 in the UK [11]. - The group is focusing on long-term investments in the global energy market to build a sustainable business portfolio, including hydrogen integration in heating fuels [10]. - The group aims to continue seeking suitable investment opportunities globally while supporting government initiatives for net-zero carbon goals [12]. - The group plans to focus on optimizing strategies in response to regulatory changes in its main markets in the UK and Australia [12]. Financial Position - The group’s cash and bank deposits as of June 30, 2023, amounted to HKD 3,970 million, down from HKD 5,894 million as of December 31, 2022, a decrease of about 32.6% [13]. - The group’s net cash level as of June 30, 2023, was HKD 638 million, a significant decrease from HKD 2,658 million as of December 31, 2022, representing a decline of approximately 76.0% [14]. - The total amount of guarantees and indemnities made by the group as of June 30, 2023, was HKD 230 million, down from HKD 253 million as of December 31, 2022, a decrease of about 9.1% [16]. - As of June 30, 2023, the total assets amounted to HKD 91,496 million, an increase from HKD 87,647 million as of December 31, 2022, representing a growth of approximately 4.2% [20]. - The net current assets decreased significantly to HKD 539 million from HKD 2,842 million, indicating a decline of about 81% [20]. - The company's net assets increased to HKD 88,293 million from HKD 86,857 million, reflecting a growth of approximately 1.6% [20]. - The company’s investment in joint ventures and associates increased to HKD 61,212 million from HKD 57,331 million, reflecting a growth of approximately 6.6% [20]. - The cash and cash equivalents decreased to HKD 3,907 million from HKD 5,894 million, a decline of about 33.7% [20]. - The total assets of the group's joint ventures as of June 30, 2023, amounted to HKD 140,667 million, an increase from HKD 132,482 million as of December 31, 2022, representing a 6.5% growth [30]. Governance and Compliance - The company did not repurchase, sell, or redeem any of its listed securities during the six months ended June 30, 2023 [34]. - The company maintained compliance with the corporate governance code as stipulated in the Hong Kong Stock Exchange Listing Rules during the reporting period [34]. - All directors confirmed compliance with the standard code of conduct for securities transactions during the six months ended June 30, 2023 [35]. - The board of directors consists of 6 executive directors, 2 non-executive directors, and 5 independent non-executive directors [36].

Financial Performance - Shareholder profit for 2022 was HKD 5,649 million, down from HKD 6,140 million in 2021, reflecting a decrease of approximately 8%[11] - Operating cash flow for the year was HKD 5,528 million, an increase of 4% compared to HKD 5,300 million in 2021[12] - The total equity increased slightly to HKD 86,857 million from HKD 86,767 million in 2021[11] - The company maintained a stable cash balance of HKD 5,894 million, up from HKD 4,610 million in 2021[11] - The Australian business contributed HKD 1.342 billion in profit, an increase from HKD 1.283 billion in 2021, with a focus on transforming the distribution network and increasing green energy proportion[15] - The group’s financial position remains strong, with joint ventures and associates' equity at HKD 84.636 billion as of December 31, 2022, compared to HKD 87.135 billion in 2021[177] - The total unsecured bank loans at year-end amounted to HKD 3.236 billion, down from HKD 3.433 billion in 2021[177] - Cash and bank deposits at year-end were HKD 5.894 billion, an increase from HKD 4.610 billion in 2021[177] - The net cash level as of December 31, 2022, was HKD 2.658 billion, significantly up from HKD 1.177 billion in 2021[177] Renewable Energy Initiatives - The group’s renewable energy generation capacity reached 948 MW, with gas generation capacity at 5,258 MW and coal/oil generation capacity at 3,569 MW[7] - The company is focused on transitioning to green energy and investing in innovative technologies to support carbon neutrality goals[2] - Hong Kong Electric is investing HKD 26.6 billion in a 5-year development plan to halve carbon emissions by 2035 and achieve carbon neutrality by 2050[17] - Energy Developments (EDL) launched renewable natural gas projects in Texas and Northern Territory, offsetting over 4 million tons of carbon emissions[15] - The group aims to reduce its carbon footprint in power generation, distribution, and gas supply, with specific targets aligned with the UN Sustainable Development Goals[19] - The group is actively investing in innovative technologies to alleviate customer electricity costs and enhance supply reliability, while minimizing emissions[20] - A new renewable natural gas facility in Michigan is expected to reduce emissions equivalent to 5,700 fossil fuel vehicles annually[22] - The company is collaborating with the government to increase green hydrogen production, which will significantly reduce carbon emissions when mixed with natural gas[42] Operational Developments - The installation of 240,000 smart meters by Hong Kong Electric was completed by the end of 2022 to help customers optimize energy usage[17] - UK Power Networks has a business plan approved by Ofgem to ensure predictable revenue and cash flow from April 2023 to March 2028[14] - The completion of a 150 kW community battery installation in Melbourne by Victoria Power Networks will supply power to up to 150 households during peak times[15] - The company is investing in network improvement projects, including automation and measures to mitigate the impact of wildlife on the network[44] - The company aims to transform into a distribution system operator to manage thousands of distributed energy resources effectively[45] Corporate Governance - The board consists of 6 executive directors, 2 non-executive directors, and 5 independent non-executive directors, meeting the requirement of at least one-third independent directors as per listing rules[95] - The company has maintained compliance with the corporate governance code throughout the year ending December 31, 2022[91] - The management team has extensive experience, with the finance director having over 35 years in investment, banking, and finance[86] - The company emphasizes high levels of corporate governance to attract investors and protect shareholder interests[91] - The board is responsible for establishing good corporate governance practices and procedures[120] Risk Management - The company has a corporate risk management policy that identifies, assesses, mitigates, and monitors key risks including climate change and cybersecurity[139] - The risk management framework is crucial for achieving strategic objectives, with a structured approach to identify, assess, mitigate, and monitor key business and financial risks[161] - The company maintains a risk register that is continuously updated based on the potential impact of identified risks[166] - The group has established a comprehensive risk-based approach to manage cybersecurity risks, focusing on protecting critical assets and ensuring the integrity of information systems[172] Shareholder Engagement - The company has established a shareholder communication policy to enhance effective communication with shareholders and investors[152] - The annual general meeting was held in a hybrid format, allowing shareholders to participate online, ensuring health and safety during the pandemic[153] - The company encourages shareholders to access communications via its website to support environmental sustainability[154] - Major shareholders include Hyford Limited, holding 767,499,612 shares, representing 36.01% of the total equity[157] Financial Reporting - The company's financial statements have been audited and reflect a true and fair view of the financial position as of December 31, 2022[197] - The audit procedures included evaluating the independence and competence of auditors for major overseas associates and joint ventures[200] - The company reported a final dividend of HKD 2.04 per share, with 99.6304% of votes in favor during the annual general meeting[153] - The audited financial statements for the year ended December 31, 2021, were adopted with 99.5054% approval[153]

Financial Performance - The group's net profit attributable to shareholders for the year ended December 31, 2022, was HKD 5.649 billion, a decrease from HKD 6.14 billion in 2021, impacted by increased financial costs and currency weakness [2]. - Operating cash flow remained robust at HKD 5.528 billion, up 4% from HKD 5.3 billion in 2021 [2]. - Revenue for the year ended December 31, 2022, was HKD 1,265 million, a slight decrease from HKD 1,276 million in 2021 [18]. - Operating profit decreased to HKD 1,164 million in 2022 from HKD 1,501 million in 2021, reflecting a decline of approximately 22.5% [18]. - Profit attributable to shareholders for the year was HKD 5,649 million, down from HKD 6,140 million in 2021, representing a decrease of about 8% [20]. - Basic and diluted earnings per share were HKD 2.65 in 2022, compared to HKD 2.88 in 2021 [18]. - Total comprehensive income attributable to shareholders was HKD 6,230 million in 2022, down from HKD 8,020 million in 2021 [20]. - The pre-tax profit for 2022 was HKD 4,943 million, compared to HKD 5,056 million in 2021, reflecting a decline of approximately 2.23% [28]. - The net other income for 2022 was HKD 58 million, down from HKD 368 million in 2021, representing a significant decrease of about 84.24% [28]. - The financial costs for the year were HKD (104) million, compared to HKD (125) million in 2021, indicating a reduction of approximately 16.8% [27]. Dividends - The proposed final dividend is HKD 2.04 per share, unchanged from 2021, leading to a total annual dividend of HKD 2.82 per share [3]. - The interim dividend declared was HKD 0.78 per ordinary share, consistent with the previous year, totaling HKD 1,665 million [34]. - The proposed final dividend is HKD 2.04 per ordinary share, slightly down from HKD 2.04 in 2021, totaling HKD 4,347 million [34]. Business Segments - The UK business contributed HKD 2.517 billion in profit, down from HKD 2.819 billion in 2021, affected by short-term currency fluctuations [5]. - The Australian business generated a profit contribution of HKD 1.342 billion, an increase from HKD 1.283 billion in 2021, focusing on network transformation and increasing green energy [6]. Carbon Emission Reduction Initiatives - The company is investing HKD 26.6 billion in a five-year development plan to reduce carbon emissions in Hong Kong [9]. - The commissioning of a 380 MW combined cycle unit at Lamma Power Station increased the gas generation ratio to over 50% [9]. - The company aims to support the Hong Kong government's goal of halving carbon emissions by 2035 and achieving carbon neutrality by 2050 [9]. - The group aims to transition to a low-carbon energy mix, recognizing the urgent need for energy transformation as highlighted at the UN Climate Change Conference in November 2022 [10]. - The group plans to achieve a "near net-zero carbon" gas network by incorporating hydrogen into natural gas supplies, leading initiatives in the Northeast of England for a mixed hydrogen commercialization plan [10]. - AVR is projected to reduce over 500,000 tons of CO2 emissions annually starting in 2027 through large-scale carbon capture, reuse, and storage efforts [10]. - The company is actively pursuing hydrogen projects in Australia to reduce carbon emissions and enhance customer service [6]. Financial Position - The group's financial position remains strong, with cash and bank deposits amounting to HKD 5.89 billion as of December 31, 2022, up from HKD 4.61 billion in 2021 [13]. - The total equity in joint ventures and associates at year-end was HKD 84.63 billion, a decrease from HKD 87.13 billion in 2021 [13]. - The group has a total of HKD 3.26 billion in unsecured bank loans as of December 31, 2022, down from HKD 3.43 billion in 2021 [13]. - The group's total assets less current liabilities amounted to HKD 90,489 million as of December 31, 2022 [21]. - Net assets stood at HKD 86,857 million, with total equity attributable to shareholders also at HKD 86,857 million [21]. - The total assets as of December 31, 2022, amounted to HKD 94,527 million, an increase from HKD 94,304 million in 2021, indicating a growth of about 0.24% [27]. - The total liabilities for the year were HKD 7,670 million, compared to HKD 7,537 million in 2021, reflecting an increase of approximately 1.77% [27]. Employee Compensation - Total employee compensation reached HKD 27 million in 2022, up from HKD 24 million in 2021, with the number of employees increasing from 13 to 14 [17]. - Employee compensation increased to HKD 32 million in 2022 from HKD 29 million in 2021, representing an increase of approximately 10.34% [29]. Governance and Compliance - The company maintained compliance with the corporate governance code throughout the year, ensuring transparency and accountability [38]. - The board of directors confirmed adherence to the standard code of conduct for securities trading throughout the year [39]. - The annual general meeting is scheduled for May 17, 2023, to discuss shareholder matters [40].