AGL Energy Limited · ASX:AGL
AGL Energy — FY2020 Earnings Presentation
43 slides from AGL Energy's earnings presentation, Aug 13, 2020
Slide 1: FY20 Full-Year Results, 13 August 2020
13 August 2020
Slide 2: Agenda and presenters
1 4 Results Highlights and Business Update Financial Overview Brett Redman, Managing Director and Damien Nicks, Chief Financial Officer Chief Executive Officer 2 5 Market Update and Outlook Customer Markets Update Brett Redman, Managing Director and Christine Corbett, Chief Customer Officer Chief Ex
Slide 3: Brett Redman, Managing Director and CEO
Brett Redman Managing Director and Chief Executive Officer
Slide 4: Customer update and results highlights
• Decisive COVID-19 and bushfire response with industry-leading customer support programs CUSTOMER • Total services to customers 3.95m, including 78k new energy services and 168k broadband and phone services UPDATE • Net Promoter Score positive for the first time, a step change in customer feedback
Slide 5: Safety, Customers, People
Safety Customers People Total Injury Frequency Rate Net promoter score positive, Significant improvement in – combined employee and contractor material gains made employee engagement (per million hours worked) +2.3 73% 6.2 70% 68% 3.3 (11.1) 3.6 3.1 2.4 (18.1) (18.2) 62% (22.5) No survey taken FY16
Slide 6: Underlying Profit after tax impacted by Loy Yang outage and wholesale prices
Underlying Profit after tax impacted by Loy Yang outage, wholesale prices and depreciation as forecast Statutory profit after tax $1,015m 12% Underlying EBITDA $2,070m 9% Underlying profit after tax $816m 22% Net cash provided by operating activities $2,156m 35% Total dividend declared 98 cps 18% Re
Slide 7: Enduring programs to support business continuity, employees and customers
Comprehensive enduring programs in place to support business continuity, employees and customers Safety Customers People Financial Safety of our employees, COVID-19 Customer Support Supporting our people Strong balance sheet, contractors and customers Program in addition to will ensure long-term mat
Slide 8: Today and Future
Today Future Leader in Leader in multiple electricity and gas essential services m Leading Australian essential services provider High carbon-intensity Towards carbon-neutral Electricity Gas Electricity Gas Data Carbon Efficient, flexible and balanced supply Large Small Contracts Orchestration Large
Slide 9: FY24 growth and transformation targets
By FY24 we are targeting… Growth Transformation 4.5 million services to customers (3.95 million today) 65% of energy services to customers are digitally active 1.6 services (37% today) per customer Leading Australian (1.4 today) essential services provider Reptrak score above 70 20% of total revenue
Slide 10: AGL's five climate commitments
5 Be transparent • Inclusion of climate metrics in LTIP • TCFD analysis and engagement 1 Offer customers option of carbon neutral prices across our products • Certified carbon neutral electricity product launched • Carbon neutral option across all products by end of FY21 AGL’s 2 Support evolution of
Slide 11: Capital returned to shareholders
Capital returned to shareholders FY20 outcomes FY21 and beyond 1,400 • FY20 dividends declared consistent • Intention to pay unfranked special with 75% payout ratio, 80% franked dividends over FY21 and FY22 up to 1,200 25% of Underlying Profit after tax • Final dividend of 51 cents takes total • AGL
Slide 12: Christine Corbett, Chief Customer Officer
Christine Corbett Chief Customer Officer
Slide 13: More than 78,000 new gas and electricity services added in FY20
More than 78,000 new gas and electricity services plus 168,000 mobile and broadband services added in FY20 Total services provided to Churn spread decreased; Large Business electricity customers now 3.95m AGL churn at lowest level since 2014 portfolio growing Customer services ('000) Residential and
Slide 14: Cost per service
reduction in of energy services to 37% ombudsman complaints 60% customers are billed digitally in 2020 20% reduction in total call volume since FY17 increase of 17 percentage points since FY17 since FY17 500 $121 $160 $122 $110 Net operating costs 400 $92 (excluding FY19 affordability Cost per servi
Slide 15: Connected Customer
Simplification Connected Essentials Service • Continued simplification promise • Investment in digitisation delivering with over 1 million energy Electricity 116% increase in digital sales since and gas services to customers on Simplified products FY17 Essentials • Southern Phone Company acquired, B
Slide 16: Markus Brokhof, Chief Operating Officer
Markus Brokhof Chief Operating Officer Coopers Gap Wind Farm, Queensland
Slide 17: Generation output of 43,725 GWh to NEM pool
AGL generation output and sales (to NEM) GWh Coopers Gap Barker Inlet Loy Yang Unit 2 starts generating begins full returned to service 4,500 operation 4,000 Mt Beauty evacuated during summer bushfires 3,500 • Generation output of 43,725 GWh to 3,000 NEM pool, unchanged Increased plant availability:
Slide 18: Wholesale electricity, certificate and gas prices
Large-scale generation certificate price Electricity FY21 flat swap price Gas spot price ($/certificate) ($/MWh) ($/GJ) $80 $100 $12 $70 $10 $80 $60 $8 $50 $60 $40 $6 $30 $40 $4 $20 $20 $2 $10 $- $- $- Oct-18 Oct-19 Jul-18 Jul-19 Jul-20 Jan-19 Apr-19 Jan-20 Apr-20 Oct-18 Oct-19 Oct-18 Oct-19 Jul-18
Slide 19: Short-term focus on battery pipeline and Newcastle Power Station feasibility
Short-term focus on battery development pipeline and Newcastle Power Station feasibility AGL generation output and sales (to NEM) First new gas-fired power station in the NEM since 2012 at Barker Inlet GWh Requirement for new firmed renewables capacity 640 MW of grid scale renewables AGL has benefit
Slide 20: Margin pressure from gas supply cost headwinds
Margin pressure from previously identified supply cost headwinds crystallizing from FY21 as legacy contracts mature AGL’s East Coast gas position PJ/a AGL’s strong gas portfolio Recently signed contracts, performance in recent years combined with our storage reflects low supply costs position, provi
Slide 21: Damien Nicks, Chief Financial Officer
Damien Nicks Chief Financial Officer
Slide 22: Underlying Profit after tax bridge
Underlying Profit after tax ($m) Integrated Energy Group Customer Markets Wholesale Markets Operations Gross Group-wide Gross Margin Gross Margin Margin 31 (5) (27) (8) (29) (37) (64) (3) (14) (59) 105 (128) 14 1,040 816 FY19 Consumer Consumer Large Southern Wholesale Wholesale Eco Markets Group Inv
Slide 23: Further $100m of ongoing savings to deliver flat FY21 operating costs
Further $100m of ongoing savings to deliver broadly flat total FY21 operating costs noting considerable uncertainty surrounding COVID-19 FY18-FY20 operating costs excluding depreciation and amortisation ($m) 39 39 34 15 23 37 38 33 (42) (33) (78) (57) Plant availability: $24m Expected credit losses:
Slide 24: Expected credit loss
Expected credit loss Historic credit loss and forecast expectations FY21 outcomes highly uncertain • FY20 allowance for expected credit loss increased as a result of COVID-19 $20 million as a result of COVID-19 impact $180 $33m of announced 2.5% affordability package • FY21 allowance for expected cr
Slide 25: Cash flow and cash conversion
$m FY20 FY19 Cash conversion Underlying EBITDA 2,070 2,285 $ million Equity accounted income and onerous contracts (32) (39) 2,500 120% Movements in other assets/liabilities and non-cash 44 15 items 100% Working capital – margin receipts/(calls) 471 (187) 2,000 Working capital – other (33) (61) Unde
Slide 26: Approximately $1 billion in cash and undrawn facilities
Debt maturity profile ($m) 1,100 Approximately $1 billion in cash and undrawn facilities 1,000 900 • Baa2 rating, stable outlook, with 800 significant headroom 700 • 38.0% FFO to net debt 600 • Significant headroom to debt covenants: 500 – Gearing covenant, less than 50% → currently 25.0% 400 – Fund
Slide 27: Capital management priorities and dividend policy
• ~$600m sustaining capex forecast in FY21; continued assessment of Run existing business for optimal balance between investment and return in core assets optimal performance and value • $135m of recurring opex efficiencies re-invested since FY18; further ~$100m to be reinvested in FY21 • Ongoing op
Slide 28: Brett Redman, Managing Director and CEO
Brett Redman Managing Director and Chief Executive Officer Barker Inlet Power Station, South Australia
Slide 29: Executing strategy with discipline amid earnings pressure
While earnings pressure is increasing, cash flow is strong, we are executing strategy with discipline and there remain considerable opportunities to invest in growth as the energy sector transforms 1. 3. Growing the breadth and scale of Resilient financial position, diversity of customer base and be
Slide 30: FY21 Underlying Profit after tax guidance range
Guidance range for Underlying Profit after tax of $560 million to $660 million Includes expected $80 million to $100 million after tax benefit from AGL Loy Yang unit 2 outage insurance claim Acceleration of key operating and market headwinds as a result of COVID-19: Wholesale Gas gross margin expect
Slide 31: Supplementary Information
Supplementary Information
Slide 32: Statutory to Underlying Profit after tax
$m FY20 FY19 Change Statutory Profit after tax 1,015 905 110 Adjust for: National Assets gain on divestment - (37) 37 Residential solar operations impairment - 38 (38) Proceeds from Yandin Wind Farm development rights - (5) 5 Perth Energy acquisition costs 7 - 7 Powering Australian Renewables Fund p
Slide 33: AGL Energy FY20 Full-Year Results | 13 August 2020
AGL Energy FY20 Full-Year Results | 13 August 2020 33
Slide 34: Generation output by asset and type
GWh FY20 FY19 Change Asset AGL Macquarie – Bayswater 14,330 14,351 0% AGL Macquarie – Liddell 9,581 8,339 15% AGL Loy Yang 13,037 14,156 (8)% AGL Torrens 2,033 2,414 (16)% Barker Inlet 240 - 100% Kwinana Swift 103 - 100% SA wind 1,248 1,350 (8)% VIC hydro 710 1,027 (31)% VIC wind 1,093 1,199 (9)% NS
Slide 35: Electricity sales volumes
GWh FY20 FY19 Change Consumer New South Wales 5,577 5,559 0% Victoria 4,085 3,823 7% South Australia 1,882 1,913 (2)% Queensland 2,296 2,278 1% Consumer total 13,840 13,573 2% Large Business New South Wales 3,986 4,107 (3)% Victoria 2,424 2,558 (5)% South Australia 1,165 856 36% Queensland 2,042 2,2
Slide 36: Gas sales volumes
PJ FY20 FY19 Change Consumer New South Wales 18.1 19.6 (8)% Victoria 34.1 31.9 7% South Australia 3.0 3.0 0% Queensland 2.2 2.3 (4)% Western Australia 0.8 0.5 60% Consumer total 58.2 57.3 2% Large Business New South Wales 0.9 2.9 (69)% Victoria 8.4 8.9 (6)% South Australia 0.3 0.3 0% Queensland 4.3
Slide 37: Consumer electricity and gas results
FY20 FY19 Change Electricity Volume (GWh) 13,840 13,573 2% Average service to customer (‘000) 2,284 2,233 2% Revenue ($m) 4,091 4,068 1% Gross margin ($m) 500 505 (1)% Gross margin (%) 12.2 12.4 (0.2)ppts Gross margin per average service to customer ($) 219 226 (3)% Gross margin per MWh ($) 36.1 37.
Slide 38: Large Business electricity and gas results
FY20 FY19 Change Electricity Volume (GWh) 10,564 9,775 8% Revenue ($m) 1,823 1,734 5% Gross margin ($m) 59 34 74% Gross margin (%) 3.2 2.0 1.2ppts Gross margin per MWh ($) 5.6 3.5 60% Gas Volume (PJ) 15.8 16.4 (4)% Revenue ($m) 137 168 (18)% Gross margin ($m) 14 15 (7)% Gross margin (%) 10.2 8.9 1.3
Slide 39: Debt facilities
Debt facility ($m) Limit Usage Maturity Revolving bilateral facilities 235 - FY21 Syndicated revolving facility 400 - FY21 Revolving bilateral facility 75 75 FY22 Australian medium-term notes 600 600 FY22 Revolving bilateral facility 100 - FY23 USPP 2010 US$165m 186 186 FY23 Revolving bilateral faci
Slide 40: Coal supply vs generation outlook
Coal supply vs generation outlook (Mt) 14 12 10 8 6 4 2 - FY19 Actual FY20 Actual FY21 Forecast FY22 Forecast Contracted coal purchases Additional purchases or stockpile drawdown AGL Macquarie Generation - customer load AGL Macquarie Generation - settled at market 40 AGL Energy FY20 Full-Year Result
Slide 41: Generation capacity and carbon intensity
Capacity* Carbon intensity FY20 sent out Asset State Type Status (MW) (tCO2e/MWh) generation (GWh) AGL Macquarie - Bayswater NSW Black coal Owned 2,665 0.95 14,839 AGL Macquarie - Liddell NSW Black coal Owned 2,000 0.99 10,089 AGL Loy Yang VIC Brown coal Owned 2,210 1.26 13,456 Total coal 6,875 38,3
Slide 42: Important notice and disclaimer
• The material in this presentation is general information about AGL’s Statutory Profit and Underlying Profit: activities as at the date of this presentation. It is provided in summary form and does not purport to be complete. It should be • Statutory Profit is prepared in accordance with the Corpor
Slide 43: Contact
Contact James Hall Chantal Travers Sophia Li General Manager, Corporate Finance Head of Investor Relations Treasurer Phone: +61 2 9921 2789 Phone: +61 2 9921 2132 Phone: +61 2 9921 2092 Mobile: +61 401 524 645 Mobile: +61 428 822 375 Mobile: +61 476 809 190 Email: jbhall@agl.com.au Email: ctravers@a