Slide 1: FY19 Full-Year Results
FY19 Full-Year Results 8 August 2019
Slide 2: Results Highlights and Business Update
1 Results Highlights and Business Update Brett Redman, Managing Director & CEO 2 Financial Overview Damien Nicks, CFO 3 Market Update and Outlook Brett Redman, Managing Director & CEO 4 Q&A
Slide 3: Brett Redman, Managing Director & CEO
Brett Redman Managing Director & CEO
Slide 4: FY19 financial results
Underlying Profit after tax $1,040m, up 2%, primarily driven by electricity portfolio FY19 financial results Dividends per share 119 cents, up 2 cents per share, including 64 cents per share final dividend Extension of AGL Safety Net rewards loyalty for residential and small business gas customers I
Slide 5: Safety Customers People
Safety Customers People Total Injury Frequency Rate Quarterly Net Promoter Score Employee Engagement Index (%) (per million hours worked) (advocates less detractors) 10.9 76 70 68 (11.1) 62 6.2 6.0 5.4 (18.2) (18.1) 4.7 4.1 4.3 3.8 3.6 (22.5) 3.3 3.1 (25.4) 2.4 2.0 2.1 No survey 1.2 taken FY15 FY16
Slide 6: FY19 financial summary
FY19 FY18* Change Statutory Profit after tax ($m) 905 1,582 ▼ 43% Negative fair value movement predominantly due to higher forward electricity prices Statutory EPS (cents) 138.0 241.2 ▼ 43% Underlying EBITDA ($m) 2,285 2,236 ▲ 2% Underlying EPS (cents) 158.6 155.2 ▲ 2% Strong earnings due to electri
Slide 7: Optimise existing portfolio for performance and value
1. Optimise existing 2. Evolve and expand core 3 . Create new opportunities portfolio for performance and value energy market offerings with connected customers BROWN COAL BLACK COAL GAS RENEWABLES & DISTRIBUTED ENERGY+ DATA STORAGE ENERGY DELIVERING FOR OUR CUSTOMERS Loy Yang A and Bayswater Barker
Slide 8: Perth Energy acquisition: enterprise value of $93 million
Enterprise value of $93 million1 3rd largest electricity retailer to business customers 1,400 GWh of electricity sales to business customers 1.1 PJ of gas sales to business customers 120 MW Kwinana Swift Power Station Provides greater flexibility to AGL’s WA gas portfolio Firming opportunities for K
Slide 9: Forecast installed capacity
Forecast installed capacity Chart Title(GW, cumulative) AGL opportunities as the NEM transitions 250 Continued investment in reliability and flexibility of core thermal assets 200 Transition from energy to capacity assets – gas firming, hydro and grid-scale batteries 150 Provision of flexible storag
Slide 10: Development pipeline and Coopers Gap Wind Farm
Coopers Gap Wind Farm * 453 MW | $850m Completion FY20 Legend Bells Mountain Pumped Hydro Bayswater Power Station upgrade Completed or in construction 250 MW / 8hrs | ~$450m 100 MW | $100m Development pipeline Potential completion FY26 Completion FY23 Kanmantoo Pumped Hydro Offtake agreements 250 MW
Slide 11: FY19 AGL generation sold to the pool
FY19 AGL generation sold to the pool (GWh) Extended major Coal fleet tube Loy Yang Unit 2 AGL portfolio performed well in FY19 4,500 overhaul at Bayswater Unit 1 leaks generator fail Generation up year-on-year and near record levels 4,000 AGL Torrens and Hydro supported peak demand through summer 3,
Slide 12: Lower standing offer prices and rollout of AGL's Safety Net
FIX IMAGE Lower standing offer prices and rollout RESOLUTION To include: of AGL’s Safety Net for electricity % discount No. customers customers in FY19 % gas customers on standing offer $50 million Customer Affordability Program implemented, primarily to Staying Connected customers AGL Essentials: 3
Slide 13: Strategic priorities and operational goals
STRATEGIC PRIORITIES Growth Transformation Social Licence Accelerate growth to meet Reposition, refresh and Meet and exceed rising evolving customer needs reinvigorate AGL community expectations OPERATIONAL GOALS Safety Customers People Financial Combined employee/ NPS ranking vs. other Improve enga
Slide 14: Financial Overview
Financial Overview Damien Nicks CFO
Slide 15: Statutory to Underlying Profit after tax
($m) FY19 FY18* Change Statutory Profit after tax 905 1,582 (677) Adjust for: Significant items after tax: National Assets gain on divestment (37) - (37) Residential solar operations impairment 38 - 38 Proceeds from Yandin Wind Farm development rights (5) - (5) Sunverge impairment - 27 (27) Active S
Slide 16: Underlying Profit after tax bridge
Electricity portfolio margin Gas portfolio margin Other AGL $1,989m, up $83m $719m, down $9m $(1,668)m, down $52m 96 98 37 151 46 31 (126) (6) (86) (38) (1) (35) (9) (136) 1,018* 1,040 FY18 Total revenue Customer Fuel costs Costs of Net portfolio Total revenue Customer Gas purchases Other Fees, char
Slide 17: Further year-on-year reductions expected in FY20
Further year-on-year reductions expected in FY20 Operating costs (excluding depreciation and amortisation, $m) 39 13 33 24 (78) (42) 1,559* 1,548 FY18 CPI Ongoing business Plant availability Moranbah field One-off savings Customer Affordability FY19 efficiency savings development one off costs * Fig
Slide 18: Churn spread to rest of market increased
Churn spread to rest of market Strengthening customer loyalty Customer numbers up, reversing increased to 6.3 ppts reducing acquisitions trend of previous few years Residential and small business Acquisitions and retentions ('000) Residential and small business customer churn customer accounts ('000
Slide 19: Depreciation and amortisation expense
Depreciation and amortisation expense ($m) FY18 to FY19 up $57m FY19 to FY20 up approximately $100m CXT and ERP Operation projects largely Investment in commencement completed Depreciation Thermal and at Barker Inlet Increased methodology Other: $5m Renewables Power Station investment in revision fo
Slide 20: Electricity volumes: generation up 0.6 TWh
Comparison of Elec Volumes (TWh) Generation volumes up 0.6 TWh Increased generation at AGL Macquarie and hydro assets, offsetting decreased generation at AGL Loy Yang and AGL Torrens 13.6 Consumer customers sales down 0.2 TWh 13.8 Lower average consumption due to change in state mix of customers 9.8
Slide 21: Comparison of gross margin: electricity
Comparison of gross margin ($m) Consumer customers up $53m 1,989 Driven by a transfer price realignment from Wholesale markets 1,906 Large Business customers down $2m 36 34 505 452 Lower energy margin rates due to a change in customer mix across the portfolio 46 106 Eco Markets up $60m Increased sel
Slide 22: Comparison of gas volumes
Comparison of volumes (PJ) 180.0 167.1 Consumer customers sales down 2.6 PJ 59.9 Lower average consumption as a result of changing customer mix 57.3 and milder weather 32.3 16.4 Large Business customers sales down 15.9 PJ Continued tight market conditions 87.8 93.4 Wholesale customers sales up 5.6 P
Slide 23: Comparison of gross margin: gas
Comparison of gross margin ($m) 728 719 Consumer customers down $3m Increased discounts due to customers switching to lower priced products 249 246 15 46 Large Business customers down $31m Decrease in volumes due to tight market conditions 432 458 Wholesale up $26m Increased contracted rates to exis
Slide 24: Cash flow and cash conversion
($m) FY19 FY18* Underlying EBITDA 2,285 2,236 Equity accounted income and onerous contracts (39) (33) Movements in other assets/liabilities and non-cash items 15 21 Working capital – margin calls (187) 162 Working capital – other (61) 88 Underlying operating cash flow before interest and tax 2,013 2
Slide 25: Capital expenditure outlook
Capital expenditure outlook ($m, accruals basis) 939 Other growth – Residential battery and Crib Point Excludes major 800 growth capital Other sustaining – Gas and business unit spend expenditure yet to be approved Systems development – CXT and ERP upgrade 600 projects largely completed in FY19 550
Slide 26: FY19 sources and uses of cash; FY20 share buy-back
FY19 sources and uses of cash FY20 share buy-back Operating AGL intends to carry out an on-market buy-back of up to cash flow 5% of issued capital, representing 32,791,252 shares Proceeds from borrowings Anticipated impact of the share buy-back on net Divestments borrowing costs is approximately $13
Slide 27: Brett Redman, Managing Director & CEO
Brett Redman Managing Director & CEO
Slide 28: Current market headwinds: electricity prices and LRECs
Current market headwinds Short-term impacts What we are doing Electricity forward curve in backwardation 200 150 Investing in the reliability and flexibility of existing thermal 100 Lower contracted electricity assets 50 wholesale prices for FY20 2017 2018 NSW SA 2019 VIC 2020 and FY21 Securing opti
Slide 29: Current market headwinds: gas and coal
Current market headwinds Short-term impacts What we are doing Tight east coast gas market (PJ) 2,500 Legacy gas contracts Securing supply with Crib 2,000 maturing with new contracts Point and from domestic 1,500 at higher market prices, producers 1,000 500 reducing gas margins and 0 increasing fuel
Slide 30: Current market headwinds: DMO and VDO
Current market headwinds Short-term impacts What we are doing Default Market Offer (DMO) and Victorian Default Offer (VDO) implemented in July 2019 Lower margin in FY20 due to Grow customer base through reduction in standing offer targeted new products Electricity customer accounts by offer (%) pric
Slide 31: Underlying Profit after tax expected to be $780 million to $860 million
Underlying Profit after tax expected to be $780 million to $860 million Key drivers of year-on-year reduction Impact of the Loy Yang Unit 2 unplanned outage: $80 million to $100 million Higher depreciation expense from recent investment in plant, systems and growth: approximately $70 million Operati
Slide 32: FY19 Full-Year Results
FY19 Full-Year Results 8 August 2019
Slide 33: Supplementary Information
Supplementary Information
Slide 34: Underlying financial performance FY19 vs FY18
($m) FY19 FY18* Change Revenue 13,246 12,816 3% Gross margin 3,833 3,795 1% Operating costs (excluding depreciation and amortisation) (1,548) (1,559) (1)% Underlying EBITDA 2,285 2,236 2% Depreciation and amortisation (625) (568) 10% Underlying EBIT 1,660 1,668 (0)% Wholesale Markets 2,757 2,665 3%
Slide 35: Adoption of AASB 9 and AASB 16
AGL has adopted AASB 9 Financial Instruments and AASB 16 Leases and restated 2018 comparative figures to reflect the adoption of these new standards. The tables below summarise the adjustments recognised against each individual line item within the Group Financial Performance statement and the Summa
Slide 36: Customer Markets FY19 vs FY18
FY19 vs FY18 FY18 fees, FY18 fees, FY18 charges and charges adjusted Underlying Total $m FY19 FY181 recoveries and for Variance Variance reallocation recoveries reallocation Consumer Electricity gross margin 505 452 15 467 15 38 53 Consumer Gas gross margin 246 249 - 249 - (3) (3) Large Business Ele
Slide 37: Generation volumes by asset
GWh FY19 FY18 Change Asset AGL Macquarie – Bayswater 14,351 13,917 3% AGL Macquarie – Liddell 8,339 7,627 9% AGL Loy Yang 14,156 14,998 (6)% AGL Torrens 2,414 2,596 (7)% SA wind 1,350 1,360 (1)% VIC hydro 1,027 637 61% VIC wind 1,199 1,197 0% NSW solar 349 397 (12)% Other gas 214 198 8% NSW Wind 256
Slide 38: Generation capacity and carbon intensity
Carbon FY19 sent out Capacity Asset State Type Status intensity generation (MW) (tCO2e/MWh) (GWh) AGL Macquarie - Bayswater NSW Coal Owned 2,640 0.93 15,049 AGL Macquarie - Liddell NSW Coal Owned 2,000 0.96 8,851 AGL Loy Yang VIC Coal Owned 2,210 1.26 14,641 Total coal 6,850 38,541 AGL Torrens SA Ga
Slide 39: Coal supply vs generation outlook
Coal supply vs generation outlook (Mt) 14 12 10 8 6 4 2 - FY18 Actual FY19 Actual FY20 Forecast FY21 Forecast Contracted coal purchases Additional purchases or stockpile drawdown AGL Macquarie Generation - customer load AGL Macquarie Generation - settled at market 39 AGL Energy FY19 Full-Year Result
Slide 40: Electricity sales volumes
GWh FY19 FY18 Change Consumer New South Wales 5,559 5,543 0% Victoria 3,823 3,856 (1)% South Australia 1,913 1,944 (2)% Queensland 2,278 2,425 (6)% Consumer total 13,573 13,768 (1)% Large Business New South Wales 4,107 4,415 (7)% Victoria 2,558 2,730 (6)% South Australia 856 745 15% Queensland 2,254
Slide 41: Gas sales volumes
PJ FY19 FY18 Change Consumer New South Wales 19.6 20.9 (6)% Victoria 31.9 33.2 (4)% South Australia 3.0 3.3 (9)% Queensland 2.3 2.4 (4)% Western Australia 0.5 0.1 400% Consumer total 57.3 59.9 (4)% Large Business New South Wales 2.9 6.6 (56)% Victoria 8.9 16.4 (46)% South Australia 0.3 1.3 (77)% Que
Slide 42: Customer accounts
(‘000) 30 Jun 2019 30 Jun 2018 Change Consumer Electricity New South Wales 843 823 2% Victoria 680 658 3% South Australia 365 367 (1)% Queensland 373 372 0% Total Consumer Electricity 2,261 2,220 2% Consumer Gas New South Wales 630 643 (2)% Victoria 544 528 3% South Australia 130 131 (1)% Queensland
Slide 43: Customer Markets five-year metrics
FY15 FY16 FY17 FY18* FY19 Gross margin ($) 737m 797m 792m 701m 751m Net operating costs (including fees, charges, recoveries and depreciation and (416)m (398)m (413)m (532)m (560)m amortisation) ($) EBIT ($) 321m 399m 379m 169m 191m Gross margin per customer account ($) 198 216 217 192 206 Net opera
Slide 44: Consumer electricity and gas
FY19 FY18* Change Electricity Volume (GWh) 13,573 13,768 (1)% Average Consumer accounts (‘000) 2,233 2,240 (0)% Revenue ($m) 4,068 4,145 (2)% Gross margin ($m) 505 452 12% Gross margin (%) 12.4 10.9 1.5ppts Gross margin per average consumer account ($) 226 202 12% Gross margin per MWh ($) 37.2 32.8
Slide 45: Large Business electricity and gas
FY19 FY18 Change Electricity Volume (GWh) 9,775 9,752 0% Revenue ($m) 1,734 1,615 7% Gross margin ($m) 34 36 (6)% Gross margin (%) 2.0 2.2 (0.2)ppts Gross margin per MWh ($) 3.5 3.7 (5)% Gas Volume (PJ) 16.4 32.3 (49)% Revenue ($m) 168 339 (50)% Gross margin ($m) 15 46 (67)% Gross margin (%) 8.9 13.
Slide 46: Debt maturity profile
Debt maturity profile ($m) Investment grade credit rating and 800 metrics Moody’s Baa2 credit rating with stable outlook 600 More than $556m of cash and undrawn debt facilities 400 23.5% gearing (net debt to net debt plus adjusted equity) 8.7x interest cover 200 45.0% funds from operations to net de
Slide 47: Debt facility
Debt facility ($m) Limit Usage Maturity Revolving bilateral facilities 376 60 FY20 Syndicated revolving facility 400 350 FY21 A$600m medium-term notes 600 600 FY22 Revolving bilateral facility 75 0 FY22 USPP US$165m 186 186 FY23 Club facility term 410 410 FY25 USPP US$135m 152 152 FY26 USPP A$50m 50
Slide 48: Half-year segment revenue and EBITDA
($m) 1H15 FY15 1H16 FY16 1H17 FY17 1H18* FY18* 1H19 FY19 Wholesale Markets external revenue 1,014 2,481 1,630 3,518 1,966 4,860 2,454 4,944 2,417 5,561 Customer Markets external revenue 4,071 8,006 3,878 7,438 3,752 7,334 3,907 7,696 3,852 7,540 Group Operations external revenue 98 190 93 193 312 38
Slide 49: Important information
The information in this presentation: Statutory Profit and Underlying Profit: Is not an offer or recommendation to purchase or Statutory Profit is prepared in accordance with the subscribe for securities in AGL Energy Limited or to Corporations Act 2001 and Australian Accounting retain any securitie
Slide 50: Contact
Contact James Hall Chris Kotsaris Blathnaid Byrne General Manager, Capital Markets Senior Manager, Investor Relations Group Treasurer Phone: +61 2 9921 2789 Phone: +61 2 9921 2256 Phone: +61 2 9921 2255 Mobile: +61 401 524 645 Mobile: +61 402 060 508 Mobile: +61 424 644 947 Email: jbhall@agl.com.au