Hong Kong utility CLP may report first-half loss following decline as big as HK$7 billion in goodwill value of Australia unit

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”.