Agl Energy Limited · ASX:AGL
Agl Energy — Investor Presentation (December 2010)
22 slides from Agl Energy's investor presentation, Dec 15, 2010
Slide 1: ASX statement
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 15 December 2010 Attached is a presentation relating to this afternoon’s announcement on AGL’s NSW organic growth str
Slide 2: NSW Electricity: Organic growth to deliver higher shareholder returns
NSW Electricity El i i Organic growth to deliver higher shareholder returns Michael Fraser, Managing Director & CEO 14 December 2010
Slide 3: Disclaimer
2 Disclaimer sc a e This presentation is not intended as an offer, invitation, solicitation or recommendation with respect to the purchase or sale of any security in the United States or any other jurisdiction. Securities may not be offered or sold in the United S States absent b registration i i un
Slide 4: Agenda
3 Agenda ge da › Strategic Rationale › NSW – Valuation Influences › AGL Market Position › Organic Growth Strategy › Summary » NSW Electricity Strategy » 15 December 2010 » AGL External
Slide 5: Strategic Rationale
4 Strategic Rationale » NSW Presentation Energy Acquisition Title and Capital Raising » December February 2008 2010 » AGL AGL External Internal
Slide 6: Investment Strategy
5 Investment est e t Strategy St ategy Any investment has to meet minimum Return on Funds Employed criteria › The NSW electricity privatisation provided an opportunity to acquire scale assets in NSW. › Benchmarked against organic growth utilising AGL’s existing NSW market position and brand strength
Slide 7: Disciplined Approach
6 Disciplined Approach All investments evaluated against minimum 12% IRR hurdle › AGL llodged d d bid bids ffor a number b off assets t and d combinations bi ti › AGL provided with final opportunity to further increase bids › Didn’t represent better value for shareholders › AGL’s bids were substanti
Slide 8: NSW - Valuation influences
7 NSW - Valuation influences » NSW Presentation Energy Acquisition Title and Capital Raising » December February 2008 2010 » AGL AGL External Internal
Slide 9: Key factors influencing NSW valuation
8 Key ey factors acto s influencing ue c g NSW S valuation a uat o Retail › Transitional services agreement (TSA) › Costs › Capability and control › Integration timeframes and complexity › Rate of market churn › Existing hedge books, PPA’s utu e regulatory › Future egu ato y determinations dete at o
Slide 10: GenTrader: Over last decade pool prices consistently averaged below $40
9 Ge GenTrader ade Over last decade pool prices consistently averaged below $40 NSW Quarterly Average Pool Price History $140 $/MWh Drought $120 $100 $80 Av $39 Av. $39.25 25 $60 $40 $20 $0 1234123412341234123412341234123412341234 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: AEMO » NSW
Slide 11: GenTrader: Influences on future base load electricity prices
10 Ge GenTrader ade Influences on future base load electricity prices Wind & other renewables › Increased penetration will negatively affect base load electricity prices › ~4,000 ~4 000 MW of wind expected to be completed in NSW over next 9 years › ~11,000 MW of wind across all NEM states over next
Slide 12: AGL's Market Position
11 AGL’s Market Position » NSW Presentation Energy Acquisition Title and Capital Raising » December February 2008 2010 » AGL AGL External Internal
Slide 13: New South Wales Market Brand Performance (June 2010)
12 New South Wales Market Brand Performance (June 2010) Awareness % (Total Awareness) 88 65 20 Source: AMR Interactive » NSW Electricity Strategy » 15 December 2010 » AGL External
Slide 14: Strong improvement in 2010
13 Strong St o g improvement p o e e t in 2010 0 0 Customer rating of High impact Moments of Truth Key changes delivered via… AGL “Moments of Truth” Marketing Communications Direct mail More appealing, appealing straight talking communications 6.94 Website Website refresh and improvements 6.86 6.72
Slide 15: Continued improvements in Customer Experience
14 Continued Co t ued improvements p o e e ts in Custo Customer e Experience pe e ce Customer Services Benchmarking Australia* Ombudsman Complaints as a % of market share 1 40 mplaints 3 5 th 5 7 th 35 AGL % of total com 7 10 th 9 11 th 11 th 30 11 13 th 14 th 13 15 th nk 16 th 16 th 25 Ran 15 17 th
Slide 16: NSW Growth Strategy
15 NSW Growth Strategy » NSW Presentation Energy Acquisition Title and Capital Raising » December February 2008 2010 » AGL AGL External Internal
Slide 17: NSW Retail: Customer Growth
16 NSW S Retail: eta Customer Custo e Growth G o t 400,000 to 500,000 additional customers over next 3 years NSW Electricity Customer Growth 90 000 90,000 80,000 › AGL has consistently grown NSW 70,000 electricity y customer numbers in recent years 60,000 50,000 › Business as usual is on track to ad
Slide 18: NSW Retail: Customer Growth - Organic growth is significantly more valuable
17 NSW S Retail: eta Customer Custo e Growth G o t Organic growth is significantly more valuable › NSW electricity privatisation sale price up to $1,300 per customer › AGL’s current customer acquisition cost is running at ~$150 › Acquisition costs can double and still deliver significantly higher sh
Slide 19: NSW Generation: Adding gas fired capacity
18 NSW S Generation: Ge e at o Adding dd g gas fired ed capac capacity ty Final investment decision on Dalton expected in mid-2011 › Permitting site for up to 1,500 MW › Initially capacity of 500-750 MW › Planning application lodged and initial construction tenders received › Attractive equipment pr
Slide 20: Newcastle Gas Storage Facility (GSF)
19 Newcastle e cast e Gas Storage Sto age Facility ac ty (GSF) (GS ) Significant potential investment in NSW market › LNG tank capacity 1.5 PJ › Vaporisation rate 120 TJ/d (5 TJ/h) › Capex ~$300m › Addresses gas infrastructure supply bottlenecks › Management of peak gas demand (daily and hourly): ›
Slide 21: Summary
20 Summary y Organic growth strategy in NSW will deliver superior returns › Three Th initiatives i iti ti to t strengthen t th integrated i t t d strategy t t Acquire 400 400,000 000 to 500 500,000 000 mass market electricity customers in NSW Install 500 to 750 MW of generation capacity at Dalto
Slide 22: Further Information / Contacts
21 Further Information / Contacts A range of information on AGL Energy Limited including ASX & Media Releases, Presentations, Financial Results, Annual Reports and Sustainability Reports is available from our website: www.agl.com.au Alternatively, contact: INVESTORS MEDIA John Hobson Nathan Vass Hea