CHAIRMEN’S STATEMENT The Year’s Results epidemic affecting the Group’s The Group’s operating profit of businesses in mainland China and principal businesses after taxation The coronavirus disease causing Hong Kong, the Group’s active for the year amounted to pneumonia (COVID-19) spread response, by increasing revenue HK$7,256 million, an increase of globally and severely hit the world and reducing expenditure, has HK$243 million, up by approximately economy in 2020. Following the been effective, thus mitigating 3 per cent, compared to 2019. implementation of effective the impact of the epidemic on The Group’s profit after taxation measures to prevent and control its businesses. Furthermore, (exclusive of the Group’s share of the epidemic, mainland China benefiting from the commissioning a decrease in revaluation from has gradually resumed steady of new projects during the year, an investment property, the economic growth since the second the Group’s businesses maintained International Finance Centre quarter of last year. Despite the sustainable development. complex) amounted to Lee Ka-shing Lee Ka-kit 6 The Hong Kong and China Gas Company Limited Annual Report 20203 HK$6,484 million, a decrease At a critical moment when the Leveraging on the huge market of HK$282 million, down by world was facing the dual and customer resource advantages approximately 4 per cent, challenges of the coronavirus of city-gas businesses, alongside compared to 2019. Inclusive of pandemic and climate change, the support of national policies, the decrease in revaluation of President Xi Jinping announced the Group has actively developed a the investment property, profit at the United Nations General distributed energy system business after taxation attributable to Assembly in September 2020 that over the past few years, creating shareholders of the Group China’s goal, in response to climate energy-efficient applications and for the year amounted to change, would be to strive to have enhancing customer benefits. HK$6,007 million, a decrease carbon dioxide emissions peak More recently, the Group has of HK$958 million, down by before 2030 and achieve carbon broadened its revenue sources by approximately 14 per cent, neutrality before 2060. launching a smart energy business, compared to 2019. Earnings per using photovoltaic power The Group has always taken clean share for the year amounted to generation on the rooftops of large energy as a focus in formulating HK33.8 cents. factory buildings, and combining its development policy. Over the this with power storage functions, During the year under review, the years, the Group has developed the Internet and big data analytics Group invested HK$7,295 million natural gas markets on the and dispatch management in production facilities, pipelines, mainland, effectively helping to platforms, to effectively reduce plants and other fixed assets for reduce air pollution and carbon demand for purchasing electricity the sustainable development of emissions, and thus promote from the grid. Besides, energy its various existing and new transformation of the national innovation is a development trend businesses in Hong Kong and energy mix. As natural gas is the encouraged by national policies. mainland China. cleanest fossil energy source, The Group has set up research and mainland China has developed development bases in Shanghai large-scale natural gas Development Strategy city and Suzhou city, focusing on infrastructure facilities and of the Group the conversion and utilisation of accelerated the establishment of As a common challenge facing biomass to produce advanced natural gas production, supply, the world, climate change is biofuels using agricultural waste storage and marketing systems receiving unanimous attention and inedible bio-grease feedstock. to enhance gas supply capabilities. from governments around the The Group’s project, located in Therefore, in the process of world. By setting a clear goal to Jiangsu province, which converts striving to achieve carbon limit the increase in global average bio-grease feedstock into neutrality, high-quality temperature, the Paris Agreement hydro-treated vegetable oil development and broad market signed in 2016 advocates reducing (“HVO”) using its self-developed prospects for city-gas are greenhouse gas emissions and technology, with an annual foreseeable. accelerating transition to a green production capacity of 250,000 and sustainable growth model. Meanwhile, renewable energy tonnes, was fully commissioned All participating countries have sources such as photovoltaics, during the third quarter of 2020. now set out their own goals wind energy, hydrogen energy and Our HVO has been accredited and policies to reduce carbon biomass energy, which are in line under the “International emissions, forming a global with the country’s long-term goal Sustainability and Carbon climate governance framework. of carbon neutrality, are poised to Certification Scheme” of achieving enter a state of rapid development. a 90 per cent emission reduction. 7 CHAIRMEN’S STATEMENT It is qualified as an advanced with businesses now spread across Town Gas Business biofuel for the European markets, 27 provincial areas, will facilitate in Hong Kong generating good environmental sizeable growth of other new The Hong Kong economy was and economic benefits with businesses. Coupled with innovative severely impacted by the promising prospects. As the next research and development and coronavirus pandemic in 2020. step to realise research and favourable operating resources With inbound tourism coming to a development achievement, the across different areas, the Group standstill and restaurant, retail and Group is planning to put into trial foresees long-term and broad hotel sectors strongly hit, the local production sustainable aviation development prospects. economy contracted sharply by fuel (SAF) using biofuels as a base Furthermore, the Group has always 6.1 per cent in 2020 compared to within this year in order to foster paid attention to strengthening 2019. As a result, during 2020, new market growth area. and improving its ability to perform volume of commercial and well in the three aspects of In summary, the Group’s future industrial gas sales decreased environmental, social and development strategy is to notably, whilst volume of governance (“ESG”) sustainability harness its city-gas businesses to, residential gas sales increased and has formulated guiding policies corresponding to the country’s owing to a rise in both household and goals for implementation of energy plan, promote natural gas cooking and use of hot water, both an holistic strategy over the years. as a clean energy for different compared to 2019. Overall, total The Group’s core business applications as a substitute for volume of gas sales in Hong Kong development, in particular, is linked high-emission fossil fuels such as for 2020 was approximately to environmental protection coal and petroleum. Concurrently, 27,947 million MJ, a slight focused on clean energy, sewage the Group will accelerate the decrease of 2.7 per cent, whilst the treatment and coal-to-gas development of renewable energy number of appliances sold also conversion, amongst others, to production and utilisation by, on decreased by 12.7 per cent due to realise its vision of blue skies, white one side, taking photovoltaic a drop in people moving into new clouds, green mountains and clear power generation as a focus to properties and lower consumer water. In 2020, the Group was develop smart energy, and, on the sentiment impacted by the presented with the “Gold Award in other side, by producing biofuels, epidemic, both compared to 2019. the Public and Community Service environmentally-friendly chemical Despite this, with an effective sector” in the “Hong Kong Awards products and materials on a market strategy, appliance sales for Environmental Excellence”, commercial scale using agricultural decreased only slightly by and was also ranked in the waste through innovative research 8.3 per cent compared to 2019. “Exemplar tier of the Greater Bay and development, thereby paving Area Business Sustainability Index”, The Company proactively the way towards greater use of demonstrating the Group’s leading supported the catering sector, renewable energy. position in ESG performance. which was significantly hit by the To conclude, the Group’s The Group will continue to invest epidemic, by extensively assisting development strategy is to be resources in the research and eateries to implement infection in line with both global development of more control and by launching a environmental protection trends environmentally-friendly innovative “Supporting F&B and the and mainland China’s goals and technologies to fulfill its Economy” campaign in May 2020, policies for carbon neutrality. The responsibilities for protecting the aiming to help recovery of this Group’s development experience environment, and to create a better sector when the epidemic eased. of over 20 years in mainland China, future for the next generation. 8 The Hong Kong and China Gas Company Limited Annual Report 20204 Given the slowdown in people gradually recovered, with gross the mainland have launched moving into new properties due domestic product turning from measures to support small and to the epidemic, the number of contraction in the first quarter medium-sized enterprises, public customers was 1,943,777 as at the of 2020 to positive growth in utility enterprises have been end of 2020, a slight increase