AGL chairman Jerry Maycock announced a statutory loss after tax of $408 million at its annual general meeting in Sydney today.
Despite reporting a loss, statutory operating cash flow after tax was $1.17billion, up 13.6 per cent and it expected to return an underlying profit of between $720 and $800 million in the 2017 financial year.
He said the impairments of AGL’s gas assets were due to the volatility of commodity prices and the risks associated with long development lead times for these projects.
“The two major drivers of the impairments were the fall in global oil prices, and its consequential impact on long-term Queensland gas prices,” he said.
“At Gloucester the main factor was the Waukivory Pilot well data indicated lower than expected production volumes, rendering the project sub-economic.”
Mr Maycock used the address to outline the capital position of the company.
“The Board’s priorities are to fund improvements to the core business and provide capability to take advantage of strategic growth opportunities,” he said.
Mr Maycock said AGL will target a payout ratio of approximately 75 per cent of underlying profit, but warned AGL did not have sufficient franking credits to issue a fully franked dividend.
AGL will also carry out an on-market buy-back of up to 5 per cent of its share capital which represents almost 34 million shares at a value of $596 million (as at September 27).