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 24 September 2009 AGL Energy Limited is about to commence dispatch of its Annual Report 2009 and the Notice of Meeting in respect of the Annual General Meeting to be held on 29 October 2009. A copy of each of these documents has been lodged with the ASX today. Paul McWilliams Company Secretary For personal use only 1 AGL Annual Report 2009 For personal use only Energy in action.® AGL Annual Report 2009 1 AGL is Australia’s largest integrated renewable energy company. We are using this base to build a sustainable energy future for our customers, our investors and the communities in which we operate. AGM notice Introductory pages 1 Our integrated strategy 2 Our business units 3 Divisional highlights 4 AGL is Australia’s largest private owner, operator Group highlights 5 and developer of renewable Key achievements for the past year 6 generation assets. AGL Renewable energy 8 also operates Retail and Chairman’s Report 10 Merchant Energy businesses Managing Director’s Report 12 and has over three million 2009 Sustainability Report highlights 14 customer accounts. AGL Energy Limited A message to our retail customers 16 ABN 74 115 061 375 Leadership team 18 For personal use only Annual General Meeting Asset summary 20 AGL’s Annual General Meeting will be held at the Melbourne Convention Centre, Retail Energy – review of operations 24 1 Convention Centre Place, South Wharf, Merchant Energy – review of operations 26 Melbourne commencing at 10.30am on Thursday, 29 October 2009. Investments – review of operations 29 Front cover Upstream Gas – review of operations 30 AGL employee Jaime Clarke at the 94.5 MW Corporate governance 32 Hallett Wind Farm in South Australia. Jaime was voted Spot Trader of the Year by Energy Reporting contents 41 Bank Link in 2007 and 2008. Our integrated strategy 2 Our business units 3 AGL’s integrated strategy provides access to multiple AGL is Australia’s largest integrated renewable energy profit pools and balances risk between upstream supply company. We have major investments in the supply of gas and of energy and our customers’ demand for energy. electricity, as well as a substantial base of retail customers. Upstream supply Retail Upstream supply Energy – Increase direct ownership (core) The Retail Energy group is of gas to 2,000 PJ (2P) responsible for the sale and over the medium term. marketing of gas, electricity and related customer services. – Increase ownership or control Gas Production of electricity generation Merchant capacity to 6,000 MW. Energy Renewable Generation – Maintain our position as Australia’s largest private owner and operator of Thermal Generation renewable energy assets by The Merchant Energy group continuing to develop our is responsible for developing, operating and maintaining existing pipeline of projects. Transmission (non-core) AGL’s power generation assets, assisting our major Gas Electricity customers to prepare for a Upstream carbon constrained future, and Distribution Gas managing the risks associated (non-core) with the procurement and Gas Electricity delivery of gas and electricity for AGL’s wholesale and retail Retail markets Customer energy demand The Upstream Gas group energy portfolios. (core) – Focus on managing is responsible for building and growing margins. on AGL’s emerging positions in new coal seam gas and – Use our customer base Gas geothermal developments. For personal use only to leverage our upstream supply strategy to achieve Renewables economies of scale. – Use the benefits from our Project Phoenix to provide Electricity our customers with better options for managing their energy needs. Divisional highlights 4 Group highlights 5 AGL’s Retail Energy and Merchant Energy businesses produced AGL achieved another year of growth in 2009, strong operating EBIT results in difficult market conditions. delivering on our commitment to Shareholders. $266.8m $447.3m $16.3m $378.8m 54 cents Underlying net profit after tax +11.1% from 2008 Fully franked full year dividend +1.9% from 2008 Retail Energy Merchant Energy Upstream Gas Operating EBIT Operating EBIT Operating EBIT Operating EBITDA Underlying NPAT EPS – underlying ($million) ($million) ($million) ($million) ($million) (cents) 52.7 63.4 52.7 271.7 447.3 163.4 209.0 85.0 163.4 85.0 85.0 266.8 113.0 118.3 378.8 378.8 378.8 108.3 77.3 78.3 77.3 34178.3.0 77.3 34178.3.0 341.0 196.3 708.5 740.4 243.2 729.7 1325.696.3 708.5 740.4 325.6 325.6 337.6 662.8 192.5 297.7 550.9 550.9 504.0 43.3 Divested 16.3 EBITDA Continuing 2007 2008 2009 2007 2008 2009 2007 2008 2009 2007 2008 2009 2007 2008 2009 EBITDA 2007 2008 2009 2007 2008 2009 2007 2008 2009 – Gross margin up $48.5 million – Strong performance across – With the sale of AGL’s 30 June 30 June 30 June from increased tariffs and entire business segment. investments in Papua New 2009 2008 2007 $m $m $m a focus on higher margin Guinea, Upstream Gas largely – Wholesale electricity, gas Profit after tax from continuing operations 718.2 316.3 354.2 customers in both mass and eco-markets energy sold its operating EBIT base. market and commercial and Profit/(Loss) after tax from discontinued operations 877.9 (87.3) 56.3 procurement costs well – PNG sales proceeds partly Profit after tax attributable to Shareholders 1,596.1 229.0 410.5 industrial customer segments. managed in difficult market. used to acquire strategically Adjust for the following after tax items: – Increase of $40.5 million in important New South Wales – Fees from AGL’s wind farm Assume demerger occurred 1 July 2006 – – 116.9 operating expenses mainly gas assets by purchasing developments continued to Significant items (1441.3) (62.6) 85.9 due to process and billing provide strong returns with projects in the Gloucester issues relating to transfer and Sydney basins in close Changes in fair value of financial instruments 251.0 184.6 (287.7) contribution up $14.6 million Pro forma adjustment (27.0) (10.0) – of customers to AGL’s new to $54.6 million. proximity to one of our major billing platform. retail markets. Underlying net profit after tax 378.8 341.0 325.6 For personal use only Increase in underlying net profit after tax 11.1% 4.7% – – Process and system – Certified 2P gas reserves at performance problems 30 June 2009 up to 1,056 PJ. now resolved and the Phoenix change program now scheduled for completion by December 2009. Key achievements for the past year 6 7 By focusing on our core integrated strategy, AGL finished the year stronger than at the start. November Sale of shares in Queensland Gas Company for August $1.18 billion FY2008 results Acquisition of gas confirm AGL delivers bank and minority February on guidance and interest from Tri-Star strategy in 2008 Strong half-year Completion of transfer result announced. June Fully franked of retail customers Fully franked Refinances dividend of 27 cents to new SAP billing dividend of 26 cents $800 million 2008 per share declared platform 2009 per share declared of debt July October December January March Geothermal Alliance Sale of 50% stake in Acquisition of wind Acquisition of Agrees to construct with, and cornerstone Elgas for $221 million farm development interests in Cooper 132 MW Hallett 4 investment in, projects from Investec Basin permits from Wind Farm Torrens Energy Innamincka Petroleum For personal use only Acquisition of Completed takeover Acquisition of Gloucester Basin of Sydney Gas Limited Australian wind farm coal seam gas assets development portfolio Sale of Papua from Allco New Guinea oil Investment in Galilee and gas assets Basin coal seam gas for $1.127 billion production pilot and exploration AGL is Australia’s leading integrated renewable energy company 8 9 AGL is committed to reducing Renewable energy accounts the greenhouse intensity of the energy we supply to our customers by investing in for about 34% of AGL’s total renewable energy projects such as the landmark 140 MW Bogong generation capacity. Hydro-Electric Power Station in Victoria’s high country, the biggest hydro-electric project on mainland Australia in 25 years. AGL’s current generation breakdown compared to future generation target Once completed, the Bogong Hydro-Electric Power Station will abate about 88,000 tonnes of greenhouse gas emissions each year. Bogong Hydro-Electric Power Station Current generation breakdown Future generation target AGL, Australia’s largest ~3,940 MW* ~6,000 MW private owner, operator and developer of renewable Renewable 34% Renewable 46% energy generation, has used its first mover advantage to Gas 48% Gas 43% develop up to 2,000 MW Coal 18% Coal 11% of renewable energy For personal use only opportunities. The value of AGL’s renewable energy portfolio will grow strongly in a carbon constrained future. * Includes plant under construction. Chairman’s Report 10 11 Strategy and capital management Many of our customers experienced the implementation of the CPRS means AGL is preparing for a new energy world. AGL must have a strong balance sheet unacceptable delays in receiving bills and, delay in investment decisions and financing The CPRS and expanded renewable energy and an investment grade credit rating as a consequence, we received an increased decisions. The existing energy infrastructure targets will reduce reliance on carbon-based to operate efficiently in national energy number of complaints. Some enquiries to is stretched and huge new investment fuels across the economy, but will force markets.