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Hong Kong utility CLP may report first-half loss following decline as big as HK$7 billion in goodwill value of Australia unit
* EnergyAustralia’s earnings before tax from retail may decline in second half by HK$240 million to HK$300 million

Pearl Liu   
Published: 12:19am, 21 Jun, 2019

CLP Holdings, the bigger of Hong Kong’s two electricity suppliers, said late on Thursday it will report a loss for the first half of 2019 due to a decline as large as HK$7 billion (US$894.5 million) in the value of the goodwill of its EnergyAustralia retail business.

In a profit warning issued to the Hong Kong stock exchange, the utility, founded in 1901, said the shrinkage in EnergyAustralia’s goodwill could amount to between HK$6 billion and HK$7 billion, after a new pricing regime with lower retail tariffs is implemented in Australia from July 1.

CLP completed the purchase of state-owned EnergyAustralia’s retail business, Australia’s third-largest energy retailer, the Delta Western GenTrader bundle as well as development sites at Marulan and Mount Piper Power stations for a total of A$2.035 billion (US$1.4 billion) in March 2011.

As of December 31, 2018, EnergyAustralia’s goodwill stood at HK$15.06 billion.

CLP also said EnergyAustralia was likely to see its earnings before tax from the retail segment decline for the second half of this year by HK$240 million to HK$300 million, because it was “promoting new simple, lower cost energy to its existing customers”.

EnergyAustralia’s business was also affected by lower electricity production at its power plants in the first five months this year. Production was hit by coal supply issues affecting Mount Piper, maintenance requirements at Yallourn Power Station and higher prices for forward energy contracts.

Mount Piper, which supplies as much as 15 per cent of New South Wales’s electricity, was hit by geological issues, with the operator extracting coal of lower quality and quantity than expected.

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