AGL Energy Ltd (ASX:AGL) have released their half-yearly results. Despite declaring statutory loss for the period, the company lifted underlying profit by 24% to $375 million.
$449 Million Loss
For the 6 months ending 31st December 2015, AGL declared a statutory loss after tax of $449 million. This was $757 million below the PCP. This loss was following the write-down of its gas exploration and production assets in NSW and Queensland, which recognised an impairment charge of $640 million after tax.
There were changes in the fair value of certain electricity derivatives worth $168 and $656 million after tax, that were in association with the exit of gas exploration and production assets.
However, revenue was up 8.1% to the PCP, to $5.6 billion. Underlying profit for the period grew 24.2% for the period, to $375 million.
Nevertheless, Managing Director Andy Vesey remains optimistic: “The strong performance of our core businesses highlights that we are well positioned to capitalise on the evolution occurring in the energy sector.”
Earnings from the sale of the Macarthur Wind Farm have partly been used to repay $315 million of AGL Loy Yang senior debt. Net Debt as at the 31st December 2015 was at $2.9 billion, with a reduction of $630 million in 1H16.
Cash and cash equivalents at the end of the period was at $106 million, a 73% decline to the PCP.
Powering Australia Renewables Fund
AGL has also announced that it will establish a renewable investment funding vehicle, in order to develop new large-scale renewable generation projects. Moreover, AGL proposes to deliver the new fund, through its solar projects at Nyngan and Broken Hill.
The new investing vehicle is expecting to develop more than 1,000 MW (Megawatts) of renewable generation, which will be at a cost of approximately $2-3 billion.
The board of AGL has declared an interim fully franked dividend of 32 cents per share, up 2 cents to the PCP.
AGL has stated that FY16 Underlying profit guidance is forecasted to be between the ranges of $650-720 million, whilst being subject to normal trading conditions for the rest of the period.
Within the context of AGL, the Underlying Profit is the statutory profit after tax adjusted for significant items, along with changes in the fair value of certain electricity derivatives.
The lacklustre announcement sent AGL declining 0.5% to $18.70 (As at 12.49pm AEDT).
Author: Ben Khouri
Feb 10, 2016
Ben Khouri is a financial editor for Wise-Owl with a particular focus on the top ASX 300 companies. Having a vast background in economics and finance, Ben provides financial commentary & analysis as well as global market updates, which guide investors in devising investment strategies. Ben specialises in analysing economic data and global events from around the world and examines the impacts they have on the major equity markets.