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Purpose, Values & Strategy

Proudly Australian for more than 180 years, AGL supplies energy and other essential services to residential, small and large businesses and wholesale customers. AGL is committed to making energy, alongside other essential services, simple, fair and transparent.

Purpose

Our purpose: Progress for life

At AGL, we recognise that we have an important role to play in supporting progress – both human and technological – to make life better for our customers, our people, our communities, the Australian economy and the environment. We recognise that the world is going through extraordinary challenges. We embrace difficult issues, consider the answers carefully, and we take action to shape a better future for all. As a business, we have constantly evolved over the past 180 years. Today, we bring all that know-how to transform how Australians produce, share and consume energy. We’re investing in new ideas, partnerships and infrastructure – renewing and expanding our portfolio of energy sources and products to make them more sustainable, reliable, affordable and useful. We’ll continue to innovate in energy and other essential services to enhance the way Australians live, and to help preserve the world around us for future generations.

Strategy

Strategic priorities

AGL has three strategic priorities: Growth, Transformation and Social Licence.

Growth reflects the need for AGL to accelerate investment in new opportunities to meet evolving customer needs. This is especially important as traditional sources of value such as thermal electricity generation decline and may ultimately need to be replaced altogether.

Transformation reflects AGL’s need to reposition, refresh and reinvigorate the business in a changing world, especially as digital technology continues to alter customers’ expectations.

Social Licence reflects the need to meet and exceed rising community expectations at a time when we need to rebuild fallen levels of trust in large institutions. During FY20 shared value has been delivered by focusing on programs that recognise customers for their loyalty, partnering with the communities where we operate, and becoming a purpose and values-led organisation. This includes supporting our people, customers and communities through crisis including COVID-19, bushfires and drought.

Values

Care in every action:

Physical and psychological safety first; Responsible and sustainable in all our actions; Always considering our environment; Putting yourself in other people’s shoes.

Integrity always:

Doing the right thing; Being open and accountable; Having courageous conversations; Keeping our promise.

Better together:

Breaking down silos; Being respectful and inclusive of all; Seeking out diverse perspectives; Building collaborative partnerships.

Deliver your best:

Going the extra mile for our customers; Constantly looking to improve; Staying resilient when setbacks happen; Making excellence part of every day.

Shape tomorrow:

Having courage to explore new possibilities; Embracing opportunities to grow; Approaching challenges with a can-do attitude; Keeping the future in focus.


Capital allocation framework

To assist stakeholders with monitoring and understanding the principles by which we make decisions about financial capital we communicate our performance relative to four capital allocation principles.

Capital allocation principle

Outcome

Run existing business for optimal performance and value

~$600m sustaining capex forecast in FY21; continued assessment of optimal balance between investment and return in core assets.

$135m of recurring opex efficiencies re-invested since FY18;​ further ~$100m to be reinvested in FY21​.

Maintain strong balance sheet and dividend policy

Ongoing optimisation of borrowings to extend tenor and realise​ benefit of low interest rates.

Policy dividend pay-out ratio of 75% of Underlying Profit after tax; ​special dividends anticipated to increase effective pay-out ratio to 100% in FY21 and FY22.

Invest in growth pathways to deliver future value and prosperity

~$170m growth capex forecast in FY21; headroom to support new investment opportunities as and when they arise.

Continued application of disciplined hurdle rate 300 basis points ​above WACC.

Return excess liquidity to shareholders

On-market share buy-back: $620m returned to shareholders in FY20, expected to be completed shortly.

Special Dividend Program in FY21 and FY22; ongoing capital management headroom subject to ongoing liquidity requirements.

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