AGL Energy Limited Level 22, 101 Miller St Locked Bag 1837 T: 02 9921 2999 ABN: 74 115 061 375 North Sydney NSW 2060 St Leonards NSW 2065 F: 02 9921 2552 www.agl.com.au ASX statement 17 September 2012 Annual Report 2012 AGL Energy Limited is about to commence dispatch of its Annual Report 2012. A copy is attached. Paul McWilliams Company Secretary 1 AGL Energy Limited ABN: 74 115 061 375 All Registry communications to: Link Market Services Limited T 1800 824 513 E [email protected] Locked Bag A14 From outside Australia: www.agl.com.au Sydney South NSW 1235 T +61 2 8280 7115 ASX Code: AGK Australia F +61 2 9287 0303 Dear Shareholder, I am pleased to invite you to attend the 2012 Annual General Meeting of Shareholders (AGM), which has been scheduled as follows: Date: Tuesday 23 October 2012 Time: 10.30am (Sydney time) Venue: City Recital Hall, Angel Place, Sydney The business to be dealt with at the AGM is provided in the enclosed Notice of Meeting. If you are able to attend the AGM, please bring the enclosed Shareholder Voting Form with you to facilitate registration at the AGM. If you do not plan on attending the AGM, you are encouraged to appoint a proxy to attend and vote on your behalf by lodging your proxy appointment online at www.linkmarketservices.com.au or by completing the enclosed Shareholder Voting Form and returning it in the envelope provided. Instructions on how to appoint a proxy are detailed on the back of the Shareholder Voting Form. Proxies must be received no later than 10.30am (Sydney time) on Sunday 21 October 2012 to be valid for the AGM. Proxies may be lodged online or returned by mail or by fax on 02 9287 0309. You are encouraged to let us know of any questions you may have before the AGM. Details of how to lodge those questions prior to the AGM are at the rear of the Notice of Meeting. We look forward to seeing you at the AGM. Yours sincerely, Jeremy Maycock Chairman 17 September 2012 2012 Annual Report AGL Energy Limited ABN 74 115 061 375 AGL 2013 Financial Calendar 22 August 2012 2012 full year result and final dividend announced 30 August 2012 Ex-dividend trading commences 5 September 2012 Record date for 2012 final dividend 27 September 2012 Final dividend payable 23 October 2012 Annual General Meeting 27 February 20131 2013 interim result and interim dividend announced 28 August 20131 2013 full year results and final dividend announced 1 Indicative dates only, subject to change/Board confirmation AGL’s Annual General Meeting will be held at the City Recital Hall, Angel Place, Sydney commencing at 10.30am on Tuesday 23 October 2012. Looking back on 175 years of looking forward. Yesterday Established in Sydney in 1837, and then known as The Australian Gas Light Company, the AGL business has an established history and reputation for serving the gas and electricity needs of Australian households. In 1841, when AGL supplied the gas to light the first public street lamp, it was reported in the Sydney Gazette as a “wonderful achievement of scientific knowledge, assisted by mechanical ingenuity.” Within two years, 165 gas lamps were lighting the City of Sydney. AGL Energy Limited 2012 Annual Report 1 Tomorrow AGL is taking action to create a sustainable energy future. Currently under construction, the Macarthur wind farm will be the biggest wind farm in the Southern Hemisphere, with an installed capacity of 420 MW. AGL aims to build on these developments as part of its efforts to meet the government’s renewable energy target of 20 percent renewable energy by 2020. Today Today AGL is a top 50 ASX listed company with 3.5 million customer accounts and 3,500 employees. AGL operates Retail, Merchant Energy and Upstream Gas businesses in New South Wales, Victoria, South Australia and Queensland. In the last seven years, AGL has invested over $3 billion dollars in renewable energy generation, making us the largest developer of renewable energy assets in Australia over that period. Contents Introductory pages 1 Group Financial Highlights 2 Divisional Highlights 3 About AGL 4 Our Integrated Strategy 5 Chairman’s Report 6 Managing Director’s Report 8 Sustainable Business Strategy 10 Economic 12 Customers 14 Community 16 People and Safety 18 Climate Change 20 Environment 22 Retail Energy 24 Merchant Energy 26 Investments 29 Upstream Gas 30 Leadership Team 32 Corporate Governance 33 Reporting Contents 42 2 Group Financial Highlights AGL’s statutory profit for the year fell by 79.4% due to significant items and fair value adjustments. On an underlying basis, profit increased by 11.8% to $482.0 million. Fully franked final dividend of 32 cents per share declared brings full year dividend to 61 cents per share. 30 June 30 June 30 June 2012 2011 2010 $m $m $m Profit after tax attributable to shareholders 114.9 558.7 356.1 Adjust for the following after tax items: Significant items 155.1 27.3 (49.9) Changes in fair value of financial instruments 212.0 (154.9) 122.7 Underlying Profit 482.0 431.1 428.9 Increase in underlying profit 11.8% 0.5% 13.2% Operating EBIT ($ million) Underlying profit ($ million) EPS – underlying (cents) Dividends per share (cents) 730.4 482.0 100.0 61.0 100.0 730.4 1 92.5 91.41 652.1 656.5 482.0 60.0 61.0 428.9 431.1 59.0 2010 2011 2012 2010 2011 2012 2010 2011 2012 2010 2011 2012 1 EPS restated for the bonus element of the one-for-six share rights issue completed in June 2012. 3 Divisional Highlights AGL’s Retail Energy and Merchant Energy businesses both performed strongly. Increases in customer numbers offset the effects of a mild summer and warm winter, and reductions in average customer consumption of energy. Retail Energy Merchant Energy Upstream Gas > Operating EBIT up by 9.1% to > Operating EBIT up 21.3% to > Operating EBIT fell by 95.8% to $332.8 million. $549.7 million. $0.6 million, mainly as a result of reduced fees from developing > Gross margin per customer > Hallett 5 and Oaklands Hill wind underground gas storage. increased by 9.8%, even though farms now fully operational, adding average customer demand for 120 MW to AGL’s renewable > Approvals granted to commence energy declined. generation capacity. construction of Newcastle gas storage facility to be operational > Customer accounts up by 180,000, > Addition of Loy Yang A power station by 2015. including 152,000 new electricity increases AGL’s total controlled customers in New South Wales. generation capacity to 6,000 MW. > Proved plus probable (2P) gas reserves increased by 77PJ (3.7%). > Dual fuel customer accounts up by > Good rainfall means AGL Hydro 10.3% to 1.62 million. assets now able to operate at close to full capacity. Operating EBIT ($ million) Operating EBIT ($ million) Operating EBIT ($ million) 332.8 549.7 0.6 14.3 549.7 459.9 453.2 332.8 305.1 6.5 247.9 0.6 2010 2011 2012 2010 2011 2012 2010 2011 2012 4 About AGL Drawing on 175 years of experience, AGL operates Retail and Merchant Energy businesses, power generation assets and an upstream gas portfolio. AGL has one of Australia’s largest retail energy and dual fuel customer bases. AGL has a diverse power generation portfolio including base, peaking and intermediate generation plants, spread across traditional thermal generation as well as renewable sources including hydro, wind, landfill gas and biomass. AGL is Australia’s largest private owner and operator of renewable energy assets and is taking action to create energy solutions for the communities of today and tomorrow. 5 Our Integrated Strategy AGL’s integrated strategy Upstream supply Upstream Supply (core) > Increase direct ownership provides access to multiple of gas to meet a Gas Production substantial proportion profit pools and balances risk of AGL’s long-term domestic demand for gas between upstream supply Renewable Generation > Invest in gas storage to provide security of gas of energy and our customers’ Thermal Generation supply for our customers demand for energy. during periods of peak demand Transmission (non-core) > Increase control of peaking and renewable electricity generation to Gas be largely self-sufficient in meeting customer needs and the mandatory Electricity renewable energy target Distribution Customer Energy (non-core) Demand > Grow our electricity customer base in New Gas South Wales > Expand the range Electricity of energy efficiency services we can offer Retail markets our customers to help (core) them manage their energy costs > Provide an excellent Gas experience for our customers Renewables Electricity Natasha, Operations Engineer. Wilpena Pound Solar Power Station, Central Flinders Ranges, South Australia. 6 Chairman’s Report As part of the celebrations of the 175th anniversary of the formation of The Australian Gas Light Company, AGL has been highlighting its long history of adapting to changes in energy technologies and customer needs. The outcomes that have been achieved this year demonstrate that AGL is continuing in that proud tradition. The future promises more change. Jeremy Maycock, Chairman Financial Results Strategy This Annual Report details the considerable progress made during 2012 in all these The statutory net profit of your company was This has been a year of transformation areas. I will highlight just two items that $114.9 million, compared with $558.7 million for AGL as we continue our strategy illustrate the disciplined approach AGL has last year. This year’s result includes significant of vertical integration.