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## Ongoing profitability 

AGL’s pipeline of development projects includes gas-fired power stations; wind farms and solar PV; gas exploration and development activities; and gas production and gas storage facilities. 

The Loy Yang A power station and adjacent coal mine will provide AGL with control over one of the lowest cost generators in Australia. It will add substantial scale, diversity and improved risk management capability to AGL’s business. 

Continued improvement in AGL’s investment returns is important if we are to continue to be able to access capital on satisfactory terms. 

AGL’s underlying profit for FY2012 was $482 million, up 11.8% on FY2011. The result was largely driven by strong Merchant and Retail results. Retail results were higher due to higher customer numbers and growth in gross margin per customer. The Merchant Energy performance benefited from non- recurrence of the severe weather events which affected financial performance in FY2011, combined with strong portfolio performances in electricity, gas and eco-markets. 

Dividends paid or declared to shareholders totalled 61 cents per share, an increase of 1 cent per share on the FY2011 dividend. 

## Sustainable growth 

To operate successfully within Australia’s energy markets, it is critical that AGL maintains a solid investment grade credit rating. An investment grade rating allows AGL to manage risk by entering into high value wholesale energy contracts. It is also important in securing access to long-term debt on acceptable terms and conditions. 

AGL completed a $650 million hybrid security issue and a $900 million equity raising to fund the Loy Yang acquisition. Standard & Poor’s (S&P) have reaffirmed AGL’s long-term credit rating of BBB/stable. AGL expects to maintain a BBB credit rating based on the current capital structure and capital expenditure likely to be incurred in FY2013. 

