AGL slashes profit, spends $1.2b on Qld retailer

DIVERSIFIED energy player AGL Energy has posted a 55.3% drop in first half profit, as well as announcing it has bought the Queensland Government’s electricity retailer Powerdirect for $1.2 billion.
AGL slashes profit, spends $1.2b on Qld retailer AGL slashes profit, spends $1.2b on Qld retailer AGL slashes profit, spends $1.2b on Qld retailer AGL slashes profit, spends $1.2b on Qld retailer AGL slashes profit, spends $1.2b on Qld retailer

The Sydney-based company today said net profit for the half-year ended December 31, 2006, was $134.8 million, while revenue was $2.2 billion.

“As this is the first profit result of the new AGL, the statutory accounts are not comparable to the previous corresponding six-month period,” managing director Paul Anthony said.

“However, on a pro-forma basis, the results clearly illustrate that our merchant and retail energy businesses are tracking to expectations and performing strongly.”

The company also announced that it had acquired another 473,000 retail, industrial and commercial small-to-medium enterprise customers through its $1.2 billion purchase of Powerdirect.

The announcement followed news that AGL is seeking a trading halt as it raises $832 million to help finance the purchase.

The trading halt has been requested until market opens on Wednesday.

“Powerdirect provides AGL with significant scale and a substantial entry platform into the Queensland energy market and will help cement AGL’s position as the pre-eminent retailer of choice in Australia,” Anthony said.

Powerdirect has a combined load of 19 terawatt hours and the purchase will add four distinct businesses to AGL, he said.

“AGL is also acquiring a modest but strong footprint in the growing sector of biomass generation through four producing generation plants, two of which are fired by renewable energy,” Anthony said.

“These power generation assets give AGL access to important technologies and enhance our portfolio of renewable generation assets.

“Our strengthening renewable generation platform will help mitigate against any potential future carbon impost.”

Anthony said the assets would also fit with AGL’s plans to develop further generating facilities in the region such as its existing power generation proposals at Townsville and Mount Isa.

Meanwhile, the company said it remains committed to its proposed $14 billion nil-premium merger of equals with Origin Energy.

AGL said it believes the “unique combination of benefits” which flow from such a merger would be material and is only achievable for both companies’ shareholders through the merger.

“The business case for a merger is compelling, with the benefits widely recognised by the market,” Anthony said.

“The successful acquisition of Powerdirect enhances the opportunities for shareholders, providing the combined group greater flexibility in structuring any combined, national retail company which may be part of a solution for meeting competition requirements in the future.”

But the company said given the “status of discussions”, a range of outcomes is possible and there is no certainty they will result in an agreed merger of equals.