AGL Energy Limited · ASX:AGL
AGL Energy — Non-Deal Roadshow (March 2009)
57 slides from AGL Energy's roadshow presentation, Mar 9, 2009
Slide 1: ASX statement
AGL Energy Limited Locked Bag 1837 Level 22, 101 Miller St T: +61 2 9921 2999 ABN: 74 115 061 375 St Leonards NSW 2065 North Sydney NSW 2060 F: +61 2 9921 2552 For personal use only AUSTRALIA AUSTRALIA www.agl.com.au ASX statement 9 March 2009 Attached is a presentation to be made by Managing Direct
Slide 2: US Investor Roadshow March 2009
AGL Energy Limited For personal use only …Australia’s largest integrated renewable energy company... Michael Fraser Managing Director & CEO Stephen Mikkelsen Chief Financial Officer US Investor Roadshow March 2009
Slide 3: Disclaimer
2 Disclaimer For personal use only The information in this presentation: › Is not an offer or recommendation to purchase or subscribe for securities in AGL Energy Limited or to retain any securities currently held. › Does not take into account the potential and current individual investment objectiv
Slide 4: Agenda
3 Agenda For personal use only › About AGL Energy – Background, Strategy & 1H09 Result Overview › Australian Energy Landscape & Renewable Policies › AGL Renewable Positioning & Portfolio Opportunities › Outlook & Way Forward › Supplementary Information » US Investor Roadshow » March 2009 » AGL Exter
Slide 5: About AGL Energy
4 For personal use only About AGL Energy » US Investor Roadshow » March 2009 » AGL External
Slide 6: About AGL Energy
5 About AGL Energy Australia’s largest integrated renewable energy company. For personal use only › Australia's largest natural gas & electricity customer base › A world class, scaleable customer management & billing system (Phoenix SAP solution) » Australian industry leading customer acquisition &
Slide 7: AGL Energy Today – Asset Profile
6 AGL Energy Today – Asset Profile For personal use only » US Investor Roadshow » March 2009 » AGL External
Slide 8: The Integrated Strategy
7 The Integrated Strategy Balancing risk between upstream supply, retail markets & providing access to For personal use only multiple profit pools. UPSTREAM SUPPLY (Core) Capturing value & growth Capturing value & growth Upstream Gas: Gas Production Renewable Generation Thermal Generation Generation
Slide 9: The Integrated Strategy – In Action
8 The Integrated Strategy – In Action Divesting non core assets, acquiring & creating long term growth opportunities. For personal use only Sold AlintaAGL retail & cogen business (non core asset sale) Announced intention to build (71MW) Hallett 2 Wind Farm NOV 07 Acquired Enertrade (QLD) gas merchan
Slide 10: 1H09 Result Highlights
9 1H09 Result Highlights Delivering on strategy, creating value & long term growth. For personal use only › Revenue: $2,977.7m, Ï 5.1% FINANCIAL › Operating EBIT from continuing operations: $322.7m, Ï 10.2% › Statutory NPAT: $1,654.8m › Underlying NPAT: $192.5m, Ï 5.3% › Interim dividend 26 cps, ful
Slide 11: 1H09 Profit & Loss
10 1H09 Profit & Loss (excluding significant items & fair value movements) Result in line with full year guidance. For personal use only 6 months to 31 Dec 2008 31 Dec 2007 Change $m Revenue 2,977.7 2,833.8 5.1% Operating EBITDA 443.9 471.4 (5.8%) Operating EBIT Retail 145.7 134.8 8.1% Merchant 211.
Slide 12: Disciplined Capital Management
11 Disciplined Capital Management Well positioned for future growth opportunities. For personal use only › October 09 maturities covered by cash reserves › Immediate debt capacity of ~A$1.2b to A$1.8b › Reinstated BBB stable credit rating Facilities @ 20 Feb 2009 $m Limit Usage Available Maturity Cu
Slide 13: Defensive Earnings Profile
12 Defensive Earnings Profile Robust earnings during deteriorating economic conditions. For personal use only › Majority of electricity & gas gross margin is derived from mass market customer base which historically has had limited volume impacts during economic downturns Electricity Gross Margin Co
Slide 14: Upstream Gas
13 Upstream Gas Strategic acquisitions to deliver upside growth & optionality. For personal use only › Recent transactions deliver access & control over additional certified 2P reserves with further, material upside potential & optionality: » Investment in Galilee Basin CSG production pilot & explor
Slide 15: Retail – Phoenix (SAP) Business Transformation
14 Retail – Phoenix (SAP) Business Transformation Capturing Benefits. For personal use only Cumulative EBIT Benefits $60m › Final core retail migration to SAP (Phoenix) completed Nov 2008: $25m $25m » ~93% of total customer base now serviced out of $12m FY10 SAP FY08 FY09 FY07 › Business Transformat
Slide 16: Australian Energy Landscape & Renewable Policies
15 For personal use only Australian Energy Landscape & Renewable Policies » US Investor Roadshow » March 2009 » AGL External
Slide 17: Australia's National Electricity Market (NEM)
16 Australia’s National Electricity Market (NEM) For personal use only › National Electricity Market (NEM) began operating as a wholesale market for supply of electricity to retailers and end-users in 1998 Queensland › World’s longest interconnected power system – ~51,700GWh 4,000 km (2,500 miles) A
Slide 18: Australian NEM Generation Mix
17 Australian NEM Generation Mix Coal dominates the current Australian landscape. For personal use only Generation Capacity: ~43,000 MW Generation Output: ~210,000 GWh Gas Gas 15% Wind 8% 1% Hydro Wind 6% 2% Oil 1% Coal Hydro 65% 17% Oil Coal 1% 84% » US Investor Roadshow » March 2009 » AGL External
Slide 19: Proposed Renewable Legislative Changes
18 Proposed Renewable Legislative Changes. Federal Government to legislate two schemes – Expanded RET & For personal use only Carbon Pollution Reduction Scheme (CPRS). Expanded Renewable Energy Target (RET) scheme (Expanded RET previously called MRET) › Target to increase from 9,500 GWh in 2010 to 4
Slide 20: Required Renewables Growth
19 Required Renewables Growth Expanded Renewable Energy Target (RET) Drives Growth. For personal use only 50000 Exisiting MRET Expanded RET 45000 › New federal Government Policy – by 40000 2020 an additional 35,500 GWh p.a. of renewable energy required to meet the 35000 target of 45,000 GWh p.a. 300
Slide 21: Required Renewables Growth
20 Required Renewables Growth Indicative new build generation mix dominated by renewables. For personal use only › Investment in renewable generation under expanded RET displaces gas fired generation and moderates gas demand as a transitional fuel Current MRET + CPRS Expanded RET + CPRS Renewables D
Slide 22: AGL Renewable Positioning and Portfolio Opportunities
21 For personal use only AGL Renewable Positioning and Portfolio Opportunities » US Investor Roadshow » March 2009 » AGL External
Slide 23: Renewables & Carbon: First Mover Advantage
22 Renewables & Carbon: First Mover Advantage AGL’s strategy benefits from recent Government announcements. For personal use only EXISTING AGL STRATEGY RECENT RECENTGOVERNMENT GOVERNMENTPOLICY POLICY POSITIVE POSITIVEAGL AGLOUTCOMES OUTCOMES ~930 MW renewable generation in Government committed to ex
Slide 24: Australia - World Class Wind Resource
23 Australia - World Class Wind Resource For personal use only Average wind speeds (metres per second) › Wind resource is best in Tasmania and areas in Western Australia, South Australia and Victoria › NSW, Queensland and the Northern Territory have limited large scale wind potential › The best wind
Slide 25: Renewable Generation – Growth Pipeline
24 Renewable Generation – Growth Pipeline Developing a portfolio with strategic depth and optionality. For personal use only Nominal Project Capacity Location Type Project Status Definition (MW) Bogong 140 Victorian Alps Hydro Under Construction Committed McKay Creek Up Rate 10 Victorian Alps Hydro
Slide 26: Gas Generation – Growth Pipeline
25 Gas Generation – Growth Pipeline Developing a portfolio with strategic depth and optionality. For personal use only Nominal Project Location Type Project Status Definition Capacity (MW) In Development, Development Leafs Gully 360 NSW - Appin Gas Peaker Probable application being assessed Tarrone
Slide 27: A Carbon Effective Portfolio
26 A Carbon Effective Portfolio Both the current & future AGL generation portfolios are well positioned to For personal use only deliver material upside in a carbon constrained environment. Current generation ~ 3,730 MW1 Potential generation post development projects ~11,170MW2 Coal 6% Coal 18% Gas
Slide 28: Upstream Gas – Delivering Duration & Flexibility
27 Upstream Gas – Delivering Duration & Flexibility Increasing self supply. For personal use only › Existing portfolio flexibility allows timely development of gas production projects › AGL will continue to be a significant contractor of wholesale gas › Anticipate recent acquisitions of Gloucester,
Slide 29: Upstream Gas – Growth Pipeline
28 Upstream Gas – Growth Pipeline Developing a portfolio with strategic depth, duration and optionality. For personal use only » US Investor Roadshow » March 2009 » AGL External
Slide 30: Outlook & Way Forward
29 For personal use only Outlook & Way Forward » US Investor Roadshow » March 2009 » AGL External
Slide 31: Financial Outlook & Strategic Priorities
30 Financial Outlook & Strategic Priorities For personal use only › Reconfirm FY09 EBITDA guidance of $775 million to $820 million › Reconfirm FY09 underlying NPAT guidance of $370 million to $400 million: Financial » Excludes SunGas & Powerdirect customer amortisation charge of $18.1m outlook › Rec
Slide 32: Further Information / Contacts
31 Further Information / Contacts For personal use only 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: Graeme Thompson Head
Slide 33: Supplementary Information
32 For personal use only Supplementary Information » US Investor Roadshow » March 2009 » AGL External
Slide 34: Significant Items
33 Significant Items Asset sales deliver substantial profits. For personal use only 6 months to 31 Dec 2008 Pre Tax Tax After Tax $m Divestment of PNG 926.6 (36.0) 890.6 Divestment of QGC 754.4 (247.5) 506.9 Divestment of Elgas 149.9 (29.0) 120.9 Divestment of North Queensland Pipeline 23.1 (9.5) 13
Slide 35: Balance Sheet
34 Balance Sheet For personal use only As at 31 Dec 2008 31 Dec 2007 $m Current assets 3,932.9 3,576.8 PPE and oil & gas assets 2,561.9 2,331.4 Other non current assets 3,752.6 4,291.0 Total Assets 10,247.4 10,199.2 Current liabilities 1,609.1 2,053.4 Total debt 1,756.0 2,390.9 Other non current lia
Slide 36: Operating Cash Flow Summary
35 Operating Cash Flow Summary Continued focus and improvement. For personal use only 6 months to 31 Dec 2008 31 Dec 2007 $m EBITDA (before significant items) 443.9 471.4 Equity accounted associates & joint ventures (net of dividends received) 4.6 (6.9) Net finance costs (69.1) (91.9) Tax refunded (
Slide 37: Industry Leading Generation Portfolio & Opportunities
36 Industry Leading Generation Portfolio & Opportunities AGL’s extensive renewable portfolio and development opportunities will For personal use only deliver material competitive advantage in a carbon environment. Generation - Operating & Committed Generation – Development Opportunities 4,000 8,000
Slide 38: Competitor Comparison
37 Competitor Comparison Customer numbers and gas reserves. For personal use only Customer Numbers Gas Reserves (2P) 3,500 6,000 Elec tric ity Gas 2P Reserves 3,000 5,000 2,500 1,419 Contrac ted 4,000 878 2,000 PJ '000 3,000 5,482 1,500 160 2,000 Contract 545 1,000 1,805 1,735 20 3,119 positions not
Slide 39: Renewable Energy Certificates (RECs)
38 Renewable Energy Certificates (RECs) Expanded RET to put upward pressure on pricing For personal use only $80.00 SPOT 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 $70.00 $60.00 $50.00 $/REC $40.00 $30.00 $20.00 $10.00 3 4 5 6 7 8 03 04 05 06 07 08 09 -0 -0 -0 -0 -0 -0 r- r- r- r- r- r- ct ct
Slide 40: Electricity Flat Forward Price Curve
39 Electricity Flat Forward Price Curve (Calendar year contract) Carbon, coal pricing and electricity demand growth to drive pricing. For personal use only $ MW/h 100 NSW QLD SA VIC 90 80 70 60 50 40 30 20 10 0 09 3 4 4 5 5 6 6 7 7 8 8 -0 r-0 -0 r-0 -0 r-0 -0 r-0 -0 r-0 -0 b- ct ct ct ct ct ct Ap Ap
Slide 41: Australian NEM Generation Demand Growth
40 Australian NEM Generation Demand Growth Average growth in peak demand and total load of ~3% p.a. For personal use only Peak Demand Total Load 40,000 250,000 35,000 200,000 30,000 25,000 GWhs MWs 150,000 20,000 100,000 15,000 10,000 50,000 5,000 - - 99 00 01 02 03 04 05 06 07 99 00 01 02 03 04 05
Slide 42: Current Renewable Legislative Landscape
41 Current Renewable Legislative Landscape. Disparate collection of state and federal based policies. For personal use only › The Mandatory Renewable Energy Target (MRET) requires all retailers (& wholesale purchasers) to purchase set proportion of their energy from ‘new renewable’ generation (post
Slide 43: Carbon Pollution Reduction Scheme – White Paper
42 Carbon Pollution Reduction Scheme – White Paper AGL industry leading generation portfolio to benefit. For personal use only Indicative AGL financial outcomes under CPRS1,2 $350 › All indicators suggest measured start to Carbon Pollution Reduction Scheme (CPRS) in $300 2010 Earnings change NPV to
Slide 44: Carbon Pollution Reduction Scheme - White Paper
43 Carbon Pollution Reduction Scheme - White Paper AGL industry leading generation portfolio to benefit. For personal use only AGL Power Station Regional NPV Uplift Region Stations Intensity Intensity (to 2020) Queensland Yabulu 0.5 1.040 Oakey 0.7 New South Wales - - 1.062 Victoria Somerton 0.7 1.3
Slide 45: New Build Gas Generation Moderated
44 New Build Gas Generation Moderated. Gas demand materially moderated under combined CPRS and expanded RET For personal use only policies. Indicative gas demand growth scenarios1 250 Current MRET Current MRET+CPRS Expanded RET+CPRS Gas consumption for new gas-fired power generators (PJ) › Expanded
Slide 46: East Coast Gas - Substantial Reserves & Duration
45 East Coast Gas - Substantial Reserves & Duration Security of supply given quantum of ongoing Eastern Australia gas reserves. For personal use only 9,530 PJ CONTRACTED RESERVES 490 16,580 PJ 460 UNCONTRACTED RESERVES N. QLD – 950 Eastern Australia 2P gas reserves and 42,650 PJ CONTINGENT RESOURCES
Slide 47: Upstream Gas Interests – Permit Details
46 Upstream Gas Interests – Permit Details Permits Working For personal use only Basin Project Exploration Production 2 (Area km ) 2 (Area km ) Interest PEL 2 (6,696) - 100% PEL 5 (400) - 100% - PPL 1 (48) 100% Camden Gas Project - PPL 2 (1) 100% (Post SGL takeover) - PPL 4 (55) 100% Sydney - PPL 5
Slide 48: Delivering The Natural Hedge
47 Delivering The Natural Hedge Rebalancing retail load & generation capabilities. For personal use only › Physical / owned intermediate & peak generation cover extreme price risk periods › Equity investment in Loy Yang A provides natural financial hedge Indicative AGL load 29 January 2009 & overlay
Slide 49: Generation – Building a Balanced Portfolio
48 Generation – Building a Balanced Portfolio Diversity mitigates market risks & benefits from a carbon constrained For personal use only future. › Diversity of fuel type - renewables, gas & coal › Diversity of generation type – base, intermediate & peak › Diversity of geography – across all NEM sta
Slide 50: Share Price
49 Share Price Solid performance in a bear market. For personal use only AGL Energy vs All Ordinaries Price Index Common Base of 100 from January 08 125 AGL Market Resilience 115 105 95 85 75 65 All Ordinaries 55 45 Jan-08 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Aug-08 Sep-08 Oct-08
Slide 51: Economic Indicators - Australia
50 Economic Indicators - Australia Consumer sentiment: Australia v’s others. For personal use only » US Investor Roadshow » March 2009 » AGL External
Slide 52: Economic Indicators - Australia
51 Economic Indicators - Australia Growth: Australia v’s G7. For personal use only » US Investor Roadshow » March 2009 » AGL External
Slide 53: Economic Indicators - Australia
52 Economic Indicators - Australia House prices: international comparison. For personal use only » US Investor Roadshow » March 2009 » AGL External
Slide 54: Economic Indicators - Australia
53 Economic Indicators - Australia AUD / USD over last 12 months. For personal use only 0.98 0.94 0.90 0.86 0.82 0.78 0.74 0.70 0.66 0.62 0.58 3/03/08 3/05/08 3/07/08 3/09/08 3/11/08 3/01/09 3/03/09 » US Investor Roadshow » March 2009 » AGL External
Slide 55: Economic Indicators - Australia
54 Economic Indicators - Australia RBA rate cuts flowing through. For personal use only % % 10 10 RBA cash variable mortgage rate * 8 –378bps 8 * standard rate, bank average 6 6 –400bps 4 4 RBA cash rate: 2 now 3.25% 2 forecast low of 2.0% Sources: RBA, Westpac Economics 0 0 Feb-00 Feb-03 Feb-06 Feb
Slide 56: Economic Indicators - Australia
55 Economic Indicators - Australia Australia’s housing stock deficiency. For personal use only » US Investor Roadshow » March 2009 » AGL External
Slide 57: Economic Indicators
56 Economic Indicators Overhang of US homes for sale. For personal use only » US Investor Roadshow » March 2009 » AGL External