Strategy: Apply a disciplined approach to growth strategies that add to AGL's integrated strategy and provide sustainable cash flows.

AGL continues to pursue a capital management program that focuses on investments in core assets that generate positive cash flows. Over the past 12 months we have sold a number of assets that did not fully align with our integrated strategy, including:

  • Our interests in upstream oil and gas reserves in Papua New Guinea for $1.1 billion;
  • Our interests in Queensland Gas Company Limited for $1.2 billion; and
  • Our interests in Elgas for $221 million.

AGL has also sought to improve its cash management bringing about further liquidity efficiencies whilst lowering borrowing charges. The recognition of this disciplined approach is demonstrated by having our long-term credit rating affirmed as ‘BBB’ with Standard and Poors revising the rating outlook to stable from negative.

In June 2009, AGL successfully refinanced its 2009 and 2010 debt maturity obligations. The new facilities, which total A$800 million in two tranches, are for a term of three years maturing in June 2012.

Capital expenditure committed projects

AGL’s committed capital expenditure for 2009/10 and 2010/11 is outlined below.

Financial performance summary

2008/09

2007/08

Revenue

6.0b

$5.7b

Operating earnings before interest and tax1

670.1m

$703.2m

Net finance costs

94.0m

$175.9m

Underlying net profit after tax1

378.8m

$341.0m

Underlying basic earnings per share

85.0 cps

78.3 cps

Total annual dividend (fully franked)

54.0 cps

53.0 cps

Total assets2

9.0b

$9.5b

Shareholders’ equity

5.9b

$5.0b

Underlying operating cash flow

447.6m

$396.6m

Total capital expenditure

552.1m

$324.6m

Gearing [net debt / (net debt + equity)]

7.8%

29.0%

EBIT to average funds employed return

10.1%

10.6%

1Excluding significant items and fair value movements of financial instruments.
2Includes derivative financial instrument contracts at fair value.

Distribution of revenue

2008/09
($ million)

2007/08
($ million)

Revenue

5,995.7

5,653.5

Other income1

1,924.6

223.7

Total revenue

7,920.3

5,877.2

Cost of goods, services, materials and other external costs

(5,633.2)

(5,317.0)

Wages, salaries and benefits to employees

(283.5)

(259.1)

Dividends to Shareholders

(236.1)

(225.6)

Net interest paid on borrowings

(81.5)

(151.9)

Income tax (expense)/income

(390.6)

62.2

Movement in retained earnings

1,295.4

(14.2)

1Includes profit on sale of non-core assets.

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