AGL Energy Limited (AGL) today released its 2008 full year financial results which confirm it has met its full year earnings guidance by recording an underlying net profit after tax (NPAT) of $355.5 million.

This result was at the upper end of AGL’s revised underlying NPAT guidance of between $330 to $360 million, and was an increase of 7.6% on the previous corresponding period.

Commenting on the full-year results, AGL Managing Director, Michael Fraser, said: “These results confirm that the confidence we have expressed in the past six months about our guidance was well founded.

“The AGL business is in good shape. Our balance sheet is stronger and gives us the flexibility to pursue disciplined growth from a number of identified opportunities.

“The result marks an important step in realising value from our strategy. This will continue as Project Phoenix benefits progressively come online, enabling us to capture growth in our Retail business.

“AGL is well positioned to create value from increasing demand for energy from renewable sources as we move towards a carbon constrained environment in 2010,” Mr Fraser said.

AGL’s Retail Energy business has recorded an operating EBIT of $271.7 million, with an EBIT/Sales ratio of 5.7%. AGL maintained retail market share with net customer growth of approximately 34,000 accounts.

Project Phoenix continues to deliver benefits with net operating cost per customer account down 4.5%. More than 1.6 million customer accounts were successfully transferred to the new IT platform on schedule and with no systemic performance issues.

The balance of AGL’s mass market customer accounts are scheduled to migrate to the new SAP platform in the final quarter of calendar 2008.

AGL’s Merchant Energy business delivered an operating EBIT result of $300.8 million, up 7% on the previous corresponding period. This strong result reflected AGL’s growing diverse physical generation portfolio, including the Torrens Island Power Station (TIPS) and dispatch rights from the Oakey Power Station, along with AGL’s existing hydro and gas assets.

This strong result was offset by a lower contribution from Loy Yang Power compared to the prior year.

AGL’s electricity hedge book continues to perform extremely well. Wholesale Electricity operating EBIT was up by 69.3% as a result of the inclusion of TIPS and the Oakey Power Station dispatch rights, as well as a full-year contribution from AGL’s Queensland business. Wholesale Gas Operating EBIT fell by $12.7 million due to the prior period inclusion of a one-off adjustment for settlement of a legal dispute.

During the year AGL continued to strengthen its balance sheet. AGL disposed of non-core businesses and reduced total debt by $697 million from its FY2008 peak in December 2007. AGL disposed of its 33.0% ownership interest in AlintaAGL and of its ownership of the Chilean gas distribution business GasValpo for a combined after-tax profit of $76.8 million.

AGL confirmed its intention to dispose of its PNG assets, with the sale expected to be completed by 31 December 2008.

On 30 June 2008, AGL and its 50/50 Joint Venture partner Arrow Energy Ltd (Arrow) sold the North Queensland Gas Pipeline for $205 million (AGL’s share $102.5 million) after AGL and Arrow purchased the Enertrade assets in November 2007. 

AGL is Australia’s largest private owner and operator of renewable energy assets. The company officially commissioned the 95MW AGL Hallett 1 wind farm in South Australia and began construction on Hallett 2 (71MW). AGL announced a Heads of Agreement with Meridian for the development of the Macarthur wind farm in western Victoria (330MW).

Construction of the 140MW Bogong Hydro Power Station in the Victorian alpine region continued ahead of plan. During the year, AGL completed Australia’s first carbon trade, more than two
years ahead of the Federal Government’s formal introduction in 2010 of an emissions trading scheme, to be called the Carbon Pollution Reduction Scheme.

As previously announced at the half-yearly results in February, AGL secured rights over additional gas haulage capacity from development of the QSN and Berwyndale pipelines, which will allow AGL’s contracted gas supplies from Queensland Gas Company Limited to be delivered to AGL’s markets in South Australia and New South Wales.

AGL reconfirmed existing underlying NPAT guidance for FY2009 of $360 to $390 million. Further FY2009 guidance will be provided at the Annual General Meeting in October.

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About AGL
AGL is one of Australia's leading integrated energy companies and is taking action toward creating a sustainable energy future for our investors, communities and customers. Drawing on over 170 years of experience, AGL operates retail and merchant energy businesses, power generation assets and an upstream gas portfolio. AGL has Australia's largest retail energy and dual fuel customer base. AGL has a diverse power generation portfolio including base, peaking and intermediate generation plants, spread across traditional thermal generation as well as renewable sources including hydro, wind, landfill gas and biomass. AGL is Australia's largest private owner and operator of renewable energy assets and is looking to further expand this position by exploring a suite of low emission and renewable energy generation development opportunities.

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