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## Ongoing Profi tability 

AGL has a long pipeline of development projects which offer the potential for future growth such as new gas-fired power stations; wind farms and other renewable generation assets; gas exploration and development activities; and gas production and gas storage facilities. 

AGL will commit the substantial capital associated with these projects when the Board is satisfied there will be real growth in shareholder wealth measured by increasing dividends and share price increases. 

Continued improvement in AGL’s profitability will be a key driver of providing shareholders with the investment returns they need to continue investing in AGL. It will also be essential if we are to continue to be able to borrow money from our lenders on satisfactory terms. 

AGL’s underlying profit for FY2011 was $431.1 million, up only 0.5% on FY2010. This is in line with revised earnings guidance provided to the share market following a combination of severe summer weather conditions in eastern and southern Australia. Although the underlying profit was relatively flat, operating cash-flow increased by more than 7% to $676 million, demonstrating the strength of AGL’s core business. 

Dividends paid to shareholders totalled 60 cents per share, an increase of 1 cent on FY2010. 

## Sustainable Growth 

It is crucial that AGL maintains a solid investment grade credit rating to operate effectively in Australia’s energy markets. Wholesale contracts are an important element of managing the cost of procuring energy. An investment grade credit rating allows AGL to enter into these high value contracts on the terms necessary to effectively manage risk. An investment grade credit rating is also important in securing access to long-term debt on acceptable terms and conditions. 

Standard & Poor’s (S&P) have reaffirmed AGL’s long-term credit rating of BBB/stable. Current debt levels and capital expenditure expected to be incurred in FY2012 provide AGL with debt headroom of approximately $500 million to maintain a BBB credit rating. 

