Li Ka-shing-controlled utilities firm Power Assets posts lower underlying profit

Tycoon Li Ka-shing-controlled utilities firm Power Assets posted a 28 per cent decline in underlying profit for last year due to the spin-off of its Hong Kong power unit and the absence of tax credits that boosted profit of its operations in Britain in 2013.

Net profit amounted to HK$61 billion, up 446 per cent from HK$11.17 billion in 2013, thanks to a HK$52.93 billion one-off gain from the separate flotation of its Hong Kong power generation and distribution business in the form of an investment trust company.

Stripping out the gain, net profit fell to HK$8.08 billion from HK$11.17 billion in 2013, partly due to a reduction in interest in the Hong Kong business from 100 per cent to 49.9 per cent after the spin-off.

The absence of gains from accounting “deferred tax credits” arising from the reduction of Britain’s corporate tax rate from 23 per cent to 20 per cent in 2013, also led to a net profit drop in its British operation to HK$4.86 billion from HK$5.87 billion in 2013. The operation posted a profit of HK$4.2 billion in 2012.

“Excluding the impact on the deferred tax credits, all our four investments in the United Kingdom benefitted from stable performance and delivered satisfactory results in 2014,” Power Assets said in a filing to Hong Kong’s stock exchange on Tuesday.

The firm has re-stated its 2013 results to reflect a change in accounting treatment after the spin-off and provide like-for-like comparison to last year’s results, as its principal business changed from power generation and supply to investment in power and utility-related businesses.