AGL announces $2.7b in asset write-downs
Energy giant AGL will recognise a $2.69 billion charge in its first-half results, reflecting asset impairments and onerous contracts.
Australia’s largest energy retailer – and largest generator of electricity – on Thursday said a $1.9 billion impairment would be made against contracts related primarily to legacy wind farm offtake agreements, while environmental restoration provisions have increased by $1.1 billion.
Further impairments of $532 million will be made on AGL’s Generation Fleet and Natural Gas assets, net of a positive tax effect of $878 million.
“These charges follow an accelerated deterioration to long-term wholesale energy market forecasts in recent months, reflecting policy measures to underwrite new build of electricity generation and lower technology costs, leading to expectations of increased supply,” the company told investors this morning.
“As a result, the long-term outlook for wholesale electricity and renewable energy certificates now indicates a sustained and material reduction in prices.”
However, AGL anticipates the accounting changes will have an immaterial impact on FY21 underlying profit after tax – which excludes significant items.
As a result, AGL’s guidance range for FY21 underlying profit is unchanged from the range of $500 million to $580 million provided on December 21. It anticipates a positive impact to underlying profit after tax in FY22 and FY23 of about $50 million to $80 million.
AGL shares are 5.9 per cent lower at $11.15 in early afternoon trade on Thursday.
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Source: Thanks smh.com