AGL Energy Limited · ASX:AGL
AGL Energy — FY2004 Earnings Presentation
23 slides from AGL Energy's earnings presentation, August 2004
Slide 1: 2004 full year results
2004 full year results Greg Martin, Managing Director
Slide 2: Highlights of the Year
HIGHLIGHTS OF THE YEAR • Growth in profit • Healthy cashflow • All operating businesses performed well • Increased retail competition • Acquisition of 32.5% interest in Loy Yang Power • Satisfactory regulatory outcomes 2
Slide 3: Key Financial Results
KEY FINANCIAL RESULTS Reported performance 2003 2004 Change EBIT $687.3m $701.0m + 2.0% Profit after tax $295.0m $349.5m + 18.5% Earnings per share 67.3c 76.8c + 14.1% Operating cashflow $542.2m $637.2m + 17.5% Operating cashflow per share 123.6c 140.1c + 13.3% Final dividend 29c 31c + 6.9% % franki
Slide 4: Major Events
MAJOR EVENTS ... DURING THE YEAR • Power Generation – Loy Yang Power investment – Plans to expand Hallett Peaking Plant • Retail price paths agreed • Successful management of Moomba disruption • New Zealand – Capital return and bond issue – Resolution of Maui & Indemnity Gas issues … FOLLOWING YEAR
Slide 5: Financial Summary: Profit and Loss
FINANCIAL SUMMARY Profit and Loss * 2003 2004 Change ($m) ($m) Revenues 3,924.1 4,183.4 + 6.6% Expenses -3,058.7 -3,309.3 + 8.2% Equity accounted share of JV profits 73.1 84.0 + 14.9% EBITDA 938.5 958.1 + 2.1% Depreciation and amortisation -249.9 -244.3 - 2.2% EBIT 688.6 713.8 + 3.7% Borrowing costs
Slide 6: Financial Summary: Cash Flows
FINANCIAL SUMMARY (cont.) Cash Flows 2003 2004 Change ($m) ($m) EBITDA (before significant items) 938.5 958.1 +2.1% Working capital -155.5 -65.5 -57.9% Equity accounting associates and JV's -11.3 -9.9 -12.4% Borrowing costs -169.2 -132.2 -21.9% Tax payments -72.7 -118.9 +63.5% Non-current asset writ
Slide 7: Financial Summary: Operating and financial metrics
FINANCIAL SUMMARY (cont.) Operating and financial metrics 2003 2004 Change Average Funds Employed $5,834.7m $5,411.4m -8.4% EBIT 1 $688.6m $713.8m +3.7% EBIT 1 / Average Funds Employed 11.8% 13.2% +1.4% Return on Average Equity 1 11.7% 12.2% +0.5% Interest expense $174.6m $134.0m -23.3% Interest cov
Slide 8: Financial Summary: Significant items (after tax)
FINANCIAL SUMMARY (cont.) Significant items (after tax) 2004 ($m) Write down associated with closure of Xstrata WA mine Windimurra power station -3.7 Share of APT's Windimurra pipeline -4.2 -7.9 APT: share of profit upon entry into tax consolidations 27.9 27.9 Telecommunication Dingo Blue 16.2 Trans
Slide 9: Segment Performance
2004 full year results Segment Performance Note: All numbers in the Segment Performance section of this presentation exclude significant items
Slide 10: Segment Performance Summary
SEGMENT PERFORMANCE SUMMARY • Energy Sales and Marketing up 11.3% – Full year of Pulse – Increased competition • Energy Networks up 8.5% – Cooler winter (return toward 6yr average temperatures) regulatory tariff changes and increased customer numbers – Gas up 8.0% – Electricity up 9.5% • Agility up
Slide 11: Financial Summary: Segment Results
FINANCIAL SUMMARY Segment Results 2003 2004 Change ($m) ($m) EBIT Energy Sales and Marketing 196.6 218.8 +11.3% Networks Gas 151.9 164.1 +8.0% Electricity 64.0 70.1 +9.5% Agility 50.5 55.5 +9.9% Power Generation 20.1 21.7 +8.0% New Zealand 139.1 129.4 -7.0% Energy Investments 88.4 86.7 -1.9% Telecom
Slide 12: Energy Sales and Marketing
ENERGY SALES AND MARKETING 1500 Degree Days 2003 2004 Change 1000 EBITDA ($m) 240.8 269.6 + 12.0% EBIT ($m) 196.6 218.8 + 11.3% 500 EBIT: sales (%) 6.3 6.3 0.0% 0 EBIT: avg FE (%) 11.7 11.5 - 0.2% NSW Vic 02/03 6 yr avg 03/04 2004 - Outcomes Current Priorities • Pulse Energy full year • Winning and
Slide 13: Energy Sales and Marketing (cont.)
ENERGY SALES AND MARKETING (cont.) • Gas - market only opened 28 July 2004 SA • Electricity - market opened Jan 2003, market churn 10% to June 2004 • Competition fuelled by Government rebate • Gas - market churn 14% for FY 2004 • Electricity - market churn 14% for FY 2004 Vic • New entrants and incu
Slide 14: Energy Networks
ENERGY NETWORKS Gas Electricity 2003 2004 Change 2003 2004 Change EBIT ($m) 151.9 164.1 + 8.0% 64.0 70.1 + 9.5% Cashflow ($m) 187.6 199.5 + 6.3% 88.3 94.7 + 7.2% Total sites 892,900 924,600 + 3.6% 272,400 279,100 + 2.5% New sites 32,300 31,700 - 1.9% 6,600 6,700 + 1.5% 2004 Outcomes Current Prioriti
Slide 15: Agility
AGILITY 75 2003 2004 Change 50 Revenue ($m) 379.0 404.3 + 6.7% EBIT ($m) 50.5 55.5 + 9.9% 25 EBIT: sales (%) 13.3 13.7 + 0.4% 0 EBIT EBITDA 2003 2004 2004 Outcomes Current Priorities • Growth in customer base • Building position as nationwide • Increased 3rd party work provider of infrastructure ser
Slide 16: NGC (AGL ownership - 66%)
NGC (AGL ownership - 66%) 150 21% 2003 2004 Change EBIT ($m) 139.1 129.4 - 7.0% 100 14% EBIT ($m) * 122.2 129.4 + 5.9% 50 7% EBIT: avg FE (%) 11.0 18.4 + 7.4% 0 0% * Excluding businesses sold in ‘03 EBIT ROFE 2003 2004 2004 Outcomes NGC Current Priorities • Benefits of business restructure • Maximis
Slide 17: Power Generation
POWER GENERATION 45 2003 2004 Change EBITDA ($m) 25.4 36.6 + 44.1% 30 EBIT ($m) 20.1 21.7 + 8.0% 15 EBIT: avg FE (%) 7.4 6.2 - 1.2% 0 EBIT EBITDA 2003 2004 2004 Outcomes Current Priorities • Equity interest in over 1,000 MW of • Additional Peaking Power generating capacity • expansion of Hallett • 3
Slide 18: Energy Investments
ENERGY INVESTMENTS 2003 2004 Change Comment ($m) ($m) ActewAGL (50%) 44.4 50.9 + 14.6% Growth in customer numbers Colder than average winter Successful customer retention APT (30%) 16.4 14.3 - 12.8% Flat underlying operating result affected by pipeline bid costs Elgas (50%) 12.8 13.9 + 8.6% Improved
Slide 19: Looking Ahead
2004 full year results Looking Ahead
Slide 20: Post Year End Development
POST YEAR END DEVELOPMENT • Decision to sell stake in NGC • Current market conditions provide opportunity to unlock value to AGL shareholders • AGL seeking higher growth investment opportunities aligned with Australian core business • Appointed adviser to assist with sale process • Form of sale stil
Slide 21: Looking Ahead: Opportunities for growth
LOOKING AHEAD Opportunities for growth • Retail – Capitalise on market position – Win and retain dual fuel customers – Establish SA electricity retail price path – NSW “trader model “ • Infrastructure – Continue to be supportive of appropriate investment – Actively seek to expand infrastructure mana
Slide 22: Outlook
OUTLOOK 2005 Result • Based on current trading conditions and barring unforeseen circumstances expect higher underlying profit and eps in 2005 • Outcome of the sale of NGC and capital management initiatives will impact the 2005 result Continued focus on returns and delivering shareholder value 22
Slide 23: 2004 full year results
2004 full year results Greg Martin, Managing Director