AGL Energy Limited · ASX:AGL
AGL Energy — FY2001 Earnings Presentation
40 slides from AGL Energy's earnings presentation, Aug 23, 2001
Slide 1: Results 2000-2001
Slide 2: Agenda
Agenda • Financial Results • The Year in Review - New Zealand - Sales & Marketing - Energy Networks - Agility - Other Businesses • The Year Ahead
Slide 3: Strategic Direction Remains
Strategic Direction Remains • Managing and investing in energy infrastructure • Marketing energy products and services • Better balancing returns between regulated and non regulated businesses • Execution of strategy under review
Slide 4: A year of Change & Challenge
A year of Change & Challenge • First full year for AGL South Australia • Competition from EGP • Entry into peaking power generation • Impact of change to pipeline ownership • Decision on networks restructuring plan deferred • Creation of ActewAGL JVs • Sale of Hutt Valley assets • Purchase of dingo
Slide 5: The Financial Result
The Financial Result 2000 2001 Underlying Profit ($m) 249.0 224.2 Net Profit ($m) 450.0 115.4 Dividend (C) 51.0 52.0 - Special (C) 23.0 - - Franking (%) 13.5 44.2
Slide 6: Significant Items after Tax
Significant Items after Tax 2000 ($m) 2001 ($m) Gas Networks sale to ActewAGL 59.7 Gas customer sale to ActewAGL 6.0 New Zealand retailing loss (245.8) dingo blue write down (19.6) Breakfast Point sale 9.5 13.6 Restructuring costs (26.7) (6.2) Sale of APT 161.9 - Tax adjustments 56.3 ______ 201.0 (1
Slide 7: Operating Result ($m)
Operating Result ($m) 2000 2001 Significant items before tax 2001 Gas Networks 173.3 222.0 Sale to ActewAGL $49.3m Electricity Networks 62.9 70.7 Agility 0 28.4 Sales & Marketing 58.5 115.4 Sale to ActewAGL $5.0m Pipelines 216.7 0 Investments 2.6 39.7 Power Generation 2.9 (0.3) LPG 17.7 13.6 Interna
Slide 8: Cash Flow ($m)
Cash Flow ($m) 2000 2001 Operating Cash Flow: 373.3 297.4 Less: - Capital expenditure 324.6 247.8 - Goldline repurchase - 128.7 - Investments 773.7 366.7 (724.6) (445.8) Dividends less DRP (6.4) 4.0 Net increase in debt 718.2 449.8 OCF / share (c) 111.0 84.4
Slide 9: Assets & Source of Funds
Assets & Source of Funds Assets up by $658.1m Source of Funds Agility Other Networks Telecoms Liabilities (Non Interest Bearing) Shareholders Cash on Deposit Funds Net Short Term Debt International - AGL Investments Sales & Marketing 2000 2001 NTA/Share 1.83 2.46 Short Term Debt/Debt & Equity (%) 49
Slide 10: New Zealand
New Zealand • Natural Gas Corporation • Trust Power • Hutt Valley Networks
Slide 11: NGC Result (Impact on AGL) $m
NGC Result (Impact on AGL) $m 2000 2001 EBIT (before significant items) 92.5 85.4 Significant items (after tax) - (245.8) Outside equity interests (12.7) 78.9 Net profit 27.5 (154.7)
Slide 12: NGC - after the event
NGC - after the event • Execution of strategy in NZ flawed • Level of risk higher than expected • Decision to exit electricity retailing essential • Further abnormal losses in July 2001 • Continuing businesses robust • Refocussing the business
Slide 13: NGC - infrastructure & related assets
NGC - infrastructure & related assets Power Generation Gas Distribution Networks High Pressure Thermal 475MW 2,550 km Gas Pipelines Hydro 32MW 9.2 PJ 2,274 km 110.6 PJ Infrastructure Energy Trading Management Natural Gas Services Electricity Gas Processing Electricity Taranaki Plant Metering Busines
Slide 14: AGL - Australian Businesses
AGL - Australian Businesses Infrastructure Management Services High Pressure Power from waste Pipelines Agility Australian Pipeline Trust 30% Telecommunications Comindico 20% Energy Sales TransACT 20% & Marketing dingo blue Australia wide Multi-Utility ActewAGL 50% LPG Business Elgas 50% Power Gener
Slide 15: Energy Sales and Marketing
Energy Sales and Marketing
Slide 16: ES&M Result ($m)
ES&M Result ($m) 2000 2001 Sales revenue 1510.1 1908.8 Less costs 1451.6 1798.4 EBIT 58.5 110.4* EBIT/Sales (%) 3.9 5.8 EBIT/Sales (%)** 4.5 4.5 * Affected by ActewAGL, UBE, GTD ** Adjusted for abnormal in 2000 and GTD in 2001.
Slide 17: A market leading business
A market leading business CUSTOMERS VOLUME 18% Share of Australian Energy Sales (PJ) Gas & Electricity users Gas 2000 2001 AGL Customers: Tariff 28.3 29.8 - Electricity 1,010,000 Contract 84.7 74.0 - Natural Gas 825,000 ACT Queanbeyan 6.2 6.4 AGL 1,835,000 Electricity Franchise 19.6 26.4 ActewAGL 13
Slide 18: Competitive Strengths
Competitive Strengths • National brand • Diversity of markets • Managing supply / demand risks • Understanding customers needs • Customer delivery systems • Successful track record in contestable markets • Multi energy and associated services capability
Slide 19: Contact Centres - Customer Satisfaction Winners
Contact Centres - Customer Satisfaction Winners GETTING THROUGH AGL NSW % 100 AGL CANBERRA 90 AGL SA 80 UTILITIES LOCAL GOVERNMENT 70 AIRLINES BANKS 60 ISPs 50 TELCOS 50 60 70 80 90 100 SERVICE DELIVERY % Source: Customer Services Benchmarking Australia
Slide 20: Risk mitigation in South Eastern Australia
Risk mitigation in South Eastern Australia • Substantial ‘flex’ in portfolio to manage demand • Up to 400 MW in peaking plants • Strong alliances with generators • Comprehensive suite of risk policies and practices • Australia vs New Zealand
Slide 21: Somerton Power Station - Victoria
Somerton Power Station - Victoria
Slide 22: Hallett Power Station - South Australia
Hallett Power Station - South Australia
Slide 23: Managing Electricity in S.A.
Managing Electricity in S.A. • Peak summer demand • End of Grace Period tariffs - Average 35% increase - 60% contestable market share - 5 year contracts - $1.3 billion in future sales secured • Hedging position
Slide 24: dingo blue
dingo blue • Operating loss ($11.2m) • Carrying value written down to $33m • Contractual relationships • In early market development phase • One.Net customer acquisition programme • Focus on quality of dingo blue customers • Roll out to AGL customers
Slide 25: Network Infrastructure
Network Infrastructure Natural Gas Electricity Telecommunications
Slide 26: Natural Gas Networks
Natural Gas Networks • EBIT $172.7m • New access undertaking 1/10/00 • Energy deliveries down 7.3% to 103.2 PJ • Tariff volume up 1.2 PJ • Sites supplied up 5% to 827,191 • 465 km mains laid Tariff Contract • Operating costs per site improved 10% to $211 Volume delivered • ACT Networks sold to Actew
Slide 27: The role of GCRA in removing cross subsidies
The role of GCRA in removing cross subsidies Transportation Revenue $m 350 * * * 300 250 • 2001 drop in contract Contract 200 revenue Tariff 150 100 • GCRA $12.6m GCRA Usage remaining for 2002 50 0 1998 1999 2000 2001 2002 2003 2004 *2002/03/04 IPART ...revenue path forecasts
Slide 28: Electricity Networks
Electricity Networks • EBIT $70.7m • New distribution pricing regime 1/1/01 • Energy delivered 14.5 PJ • Tariff markets up 4.5% to 6.0 PJ • Sites supplied 260,926 up 1.8% • Operating costs per site Tariff Contract improved 5.5% to $163 1.0 KWh = 3.6 MJ Volume delivered
Slide 29: Energy Networks Issues
Energy Networks Issues • Restructuring proposal still on hold • Price path certainty to 2004 • Preparing for contestability • Room for more growth • Separation-ownership/asset management
Slide 30: Telecommunications Networks - COMindico
Telecommunications Networks COMindico (AGL 20% interest; $33.5m invested) • IP data switching & routing system • 66 Points of Presence installed and operating • Access arrangements with Telstra concluded • Fully operational and writing good business • Funding certain
Slide 31: Telecommunications Networks - TransACT
Telecommunications Networks TransACT (AGL 20% interest; $21.3m invested) • Broadband VDSL cable system • Roll-out proceeding • Customer connection rate ahead of plan • Negotiating with additional content providers • Funding certain
Slide 32: Agility
Slide 33: Agility: assets under management and clients
Assets under management $3.6 bn - 9,000km of high pressure pipelines - 33,000km of energy networks - 1,100 employees Clients - AGL Gas Networks - Australian Pipeline Trust - AGL Electricity Networks - TransACT - ActewAGL - Country Energy - CS Energy
Slide 34: the Strategy
the Strategy • Leverage AGL’s specialised skills base • Capitalise on opportunities of increased passive asset ownership by others • Add diversity to AGL’s earnings base • Sell the benefits of competitive management and services provision
Slide 35: Other Businesses
Other Businesses - ActewAGL - Australian Pipeline Trust - Elgas/HCE - GasValpo
Slide 36: Results from Other Businesses
Results from Other Businesses 2000 2001 ActewAGL 0 26.3 Australian Pipeline Trust 0.3 10.5 LPG (Elgas and HCE) 17.7 13.6 Gas Valpo ( 3.5) ( 1.4)
Slide 37: ActewAGL - Australia's first multi-utility
ActewAGL - Australia’s first multi-utility • 50% AGL / 50% Actew Corporation • Excellent maiden performance • Owns gas and electricity networks • Operates gas, electricity, water and sewerage assets • Markets gas and electricity • Billing for gas, electricity, water and sewerage • Power generation u
Slide 38: The Year Ahead
The Year Ahead for
Slide 39: The Year Ahead
The Year Ahead • Drive existing business – Efficiency – Competitive position • Optimise capital – Improve operating cash flow – Appropriate capital structures – Review non-core businesses • Focussed growth – Consistent with strategy – Support existing businesses • Modernisation – 5% Shareholding lim
Slide 40: Slide 40