Page 22 - AGL Sustainability Report 2011

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Economic
AGL Energy Limited 20
Sustainable growth
Introduction to sustainable growth
An investment grade credit rating generally provides
more favourable borrowing margins and offers
shareholders additional confdence in the security
and sustainability of earnings and dividends.
Approach
The National Electricity Market is a gross pool, uniform, first-price,
electricity market auction. The market design and accompanying
institutional arrangements require large retailers to retain
investment grade credit ratings to ensure smooth flow of trade and
transactions in the wholesale market. Critically, an investment grade
credit rating and improved capital efficiency substantially enhance
AGL’s ability to fund future growth.
Vision for sustainable growth:
AGL’s vision is to maintain a solid
credit rating reflecting underlying growth potential.
Drivers:
Applying a disciplined approach to growth
(page 21)
and
an appropriate economic risk management framework
(page 22)
are crucial strategies in maintaining a BBB credit rating in the long
term, and allowing sustainable growth. Sustainable growth through
future investments in electricity generation and upstream gas is also
contingent on delivering new projects that provide economic benefit
to both AGL and the community
(page 23
).
Performance
In its annual ratings review, Standard & Poors (S&P) reaffirmed
AGL’s long-term credit rating of BBB/stable. Based on debt levels at
30 June 2011 and forecast capital expenditure for FY2012, AGL has
debt headroom available to maintain a BBB credit rating.
In July 2011, AGL signed two financing transactions totalling
A$1.2 billion. These transactions lengthen AGL’s debt maturity
profile and further diversify its funding sources. The transactions
include an A$1.0 billion syndicated loan facility with three- and
five-year tranches and an A$200 million loan agreement with EKF,
the Danish export credit agency.
Debt capacity
Legend
S&P adjustment
Closing FY11 debt
Capex forecast
Dalton/Newcastle
Gas Storage Facility
Dividend investment plan
Operating cash fow after
dividends
}
Headroom
FY12 forecast
$500m
FY11 actual
2,300
1,800
1,300
800
300
$ million