AGL Energy Limited (AGL) today reported Statutory Profit after tax of $325 million for the six months ended 31 December 2016 (1H17). This was $774 million more than the prior corresponding period, reflecting the impact of impairments and movements in the fair value of financial instruments in the prior corresponding period.
Underlying Profit after tax, which excludes significant items and movements in the fair value of financial instruments, was $389 million, up 4 percent. The increase was primarily a result of strength in the wholesale electricity market and the ongoing delivery of AGL’s cost reduction programs, offsetting a decline in gas margins.
AGL advises that it now expects Underlying Profit after tax for the full year to be within the upper half of its guidance range of $720 million to $800 million, subject to normal trading conditions for the remainder of the financial year.
AGL has declared an interim dividend of 41 cents per share, 80 percent franked, an increase of 9 cents per share on the previous interim dividend. The increase reflects AGL’s adoption in September 2016 of a targeted dividend payout ratio of 75 percent of annual Underlying Profit after tax and a minimum franking of 80 percent.
Profit and dividend summary
- Statutory Profit after tax: $325 million, up $774 million
- Underlying Profit after tax: $389 million, up 4 percent
- Statutory earnings per share: 48.2 cents per share, up 114.7 cents per share
- Underlying earnings per share: 57.7 cents per share, up 2.1 cents per share
- Interim dividend: 41 cents per share (80 percent franked)
AGL Managing Director & CEO, Andy Vesey, said: “AGL has achieved a strong financial result for the first half and our projected transformation, productivity and performance improvement initiatives are on track. We continue to work hard to reduce key areas of uncertainty and to address key long-term strategic imperatives in relation to prospering in a carbon-constrained world, building customer advocacy and driving growth.”
The interim dividend of 41 cents per share will be payable on 27 March 2017 with a record date of 24 February 2017. Shares will trade ex-dividend on 23 February 2017.
The dividend will be 80 percent franked. The unfranked component of the dividend will be paid from conduit foreign income, meaning it will not be subject to dividend withholding tax for non-Australian shareholders.
AGL's dividend reinvestment plan (DRP) will operate with respect to the 2017 interim dividend. AGL will buy shares on market to satisfy the DRP and will allot these shares at no discount to the arithmetic average of the daily volume-weighted average price at which AGL's shares trade during each of the 10 days commencing 28 February 2017. The last date at which shareholders can elect to participate in the DRP with respect to the FY17 interim dividend is 27 February 2017.
AGL expects Underlying Profit after tax for the financial year ending 30 June 2017 to be within the upper half of its previously disclosed guidance range of $720 million to $800 million, subject to normal trading conditions for the remainder of the year.
My Vesey said: “This outlook reflects the strength of AGL’s business and our continued discipline in relation to cost and price management.
“In our electricity portfolio, the impact of rising wholesale prices is expected to continue. The forward curve points to sustained improvement, although the impact will continue to be phased over time due to competition, customer affordability considerations and the timing of rollover of our contracted positions.
“Our guidance continues to take into account the headwinds in our gas portfolio that we have previously flagged, including: lower margins on the rollover of Queensland wholesale contracts; supply curtailment and disruption issues experienced in the first quarter; and the impacts of mild July/August weather.”
Webcast and conference call
AGL will hold a webcast and conference call to discuss the result at 10.30am today. A copy of the webcast presentation follows. The webcast will be accessible via www.agl.com.au or the following dial-in details:
Dial-in details: Toll-free (Australia) 1800 896 323
Teleconference code: 459 192 8058
Click here for international dial-in list.