AGL Energy Limited (AGL) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. My name is Peter Botten and I'm your Chairman. Welcome to AGL's 2021 Annual General Meeting, my first meeting as Chairman of AGL. I'd like to start the meeting by acknowledging the traditional owners of the land on which I am chairing this meeting from today in Perth. The Whadjuk Nyoongar people and pay my respects to their elders past, present and emerging. Directors and shareholders listening in are doing so from other ancestral lands, and I also pay my respects to the traditional owners of those lands and their elders past, present and emerging. We had originally intended to hold this year's meeting as a physical meeting in Melbourne. But given the extent of lockdown throughout Australia and in light of the potential health risks created by the COVID-19 pandemic, we decided it was prudent to host this year's meeting online. Every effort has been made to ensure that the meeting runs smoothly and that shareholders have the full ability to participate. However, if you encounter any technical issues which preclude you from attending the meeting live, a recording and transcript of the meeting will be available on our website after the meeting. Shareholders have the opportunity to ask questions in this online meeting format. [Operator Instructions] I ask that you please keep your questions brief so that as many shareholders possible have an opportunity to ask a question. For those shareholders who wish to ask a verbal question, an audio questions facility is available during this meeting. [Operator Instructions] To assist with the smooth running of the meeting, Liz McNamara, Executive General Manager of Corporate Affairs, will read out the name of the shareholder and their question. We will give all shareholders present a reasonable opportunity to ask questions, but it is possible that not all questions will be answered today. A number of shareholders also submitted questions in advance of the meeting. Individual responses have been sent to those shareholders ahead of the meeting. We'll also address key themes raised in my address and in the Managing Director and CEO's address. I now confirm that a quorum is present, and I declare the meeting open. If you are eligible to vote at this meeting, a new voting tab will shortly appear on your screen. Selecting this tab will bring up a list of resolutions and present you with voting options. To cast your vote, simply select one of the options. There's no need to hit a submit or enter button as the vote is automatically recorded. You may submit your votes at any time. I will now explain the running order for today's meeting. In a moment, I'll make a few remarks about the results for the 2021 financial year and about other topical matters. Then Graeme Hunt, AGL's Managing Director and CEO, will speak. We will then attend to the formal business of the meeting. As I mentioned... [Audio Gap] Decided on a poll. I now declare the poll open. I would now like to introduce my fellow directors who are joining us today via the online platform. They are John Stanhope, Jacqueline Hey, Patricia McKenzie, Diane Smith-Gander, Mark Bloom; and our Managing Director and CEO, Graeme Hunt. Also attending this meeting today is our Company Secretary, John Fitzgerald; and the Chief Financial Officer, Damien Nicks, as well as other members of the executive team. AGL's external auditors, Deloitte, are also attending this meeting. The senior audit partner, Jason Thorne, is available to answer any relevant questions you may wish to ask later in the meeting, and I thank him for attending today. Let me start off by acknowledging that financial year '21 was an extremely challenging year for AGL and a very disappointing year for shareholders. The acceleration of key operating and market headwinds that we have been foreshadowing for a number of years have now materialized, although the extent and impact of those headwinds on our business and industry, especially in the form of declining energy prices and the impact of COVID-19, have proven to be far greater than anyone expected. It is also beyond question that the pace of transition towards a decarbonized future in Australia has rapidly increased. And that as Australia's largest electricity generator and therefore, the largest emitter of greenhouse gases, this is also having a direct impact on the value and share price of our business. AGL is already committed to achieving net zero emissions by 2050, and your Board recognizes that we must challenge ourselves to see how we can enhance this commitment. We believe this is possible, but it must also be done in a way that doesn't ignore the essential role that our thermal assets have to play in supporting the transition by keeping the lights on and continuing to provide reliable and affordable energy as we and others invest in the change that is needed to bring new renewable energy sources into the market. Let me be very clear. Your Board understands that shareholders are very unhappy with where the AGL share price is today. And we acknowledge the financial performance as a company over the last -- past 12 months is not acceptable to shareholders or directors. So what are we doing about it? I'll firstly briefly summarize the financial performance for the past year that explain the measures that we are taking to address the challenges facing your company. Firstly, as I have acknowledged, FY '21 was a very difficult year for shareholders where we recorded a statutory loss after tax of $2.058 billion. This compares with a statutory profit after tax of just over $1 billion in the 2020 financial year. The FY '21 results included charges totaling $2.929 billion associated with onerous contract provisions and an increase in environmental restoration provisions announced on 4th of February '21. Charges were also associated with the cessation of Crib Point project and costs associated with acquisitions and restructuring. Underlying profit after tax for the 2021 financial year, which AGL regards as a more useful measure of company performance, was $537 million, down 34% on the previous year, but in line with the revised guidance range we provided in December 2020. The main drivers of the decrease in profit were a reduction in wholesale electricity prices, lower electricity demand due to COVID-19 lockdowns, mild weather and increasing penetration from rooftop solar as well as the fact that some of our older, lower-priced legacy gas supply contracts are rolling off and new contracts are being entered into at higher current prices. The final unfranked dividend of $0.34 per share will be paid on the 29th of September 2021. When added to the interim dividend of $0.41 per share, which included the $0.10 special dividend, the total dividend for the 2021 financial year was $0.75 per share. In a disappointing result, it is important to note that the wholesale electricity price is the single largest driver of AGL's earnings, and these wholesale prices have fallen to an extent not seen since 2012. In the past 3 years alone, prices have halved. AGL has, for some time, been foreshadowing market headwinds in wholesale prices. However, it's fair to say that the extent of the fall has surprised many credible market analysts and observers. We are not alone in experiencing the impact of the decline in wholesale electricity prices, which has also significantly affected others in the industry. Given the prevailing low price environment, your Board recognizes that we need to respond to these market conditions by tightening our belt. That is why we have committed to reducing our operating costs by $150 million by the end of FY '22 and reducing our sustaining capital expenditure by $100 million by FY '23. We have also announced the sale of $400 million of noncore assets by the end of FY '22. These measures will conserve capital and strengthen the balance sheet of the business. In June, as another measure to conserve capital, we announced the cessation of the special dividend program and an intention to underwrite the dividend reinvestment plan for FY '21 final and FY '22 interim dividends. While your Board recognizes the impact on shareholders of no longer receiving the proposed special dividend and the dilution caused by the dividend reinvestment program, it is prudent to conserve capital ahead of the proposed demerger next year. These measures will also allow AGL to fund long-term value-adding growth investments such as AGL's equity share in PowAR's acquisition of Tilt Renewables and the development of the Torrens Island battery. Graeme and I will speak about that and the demerger a little later on. In the short term, we are also focused on other measures to improve business performance. In our integrated energy business, we are focused on: delivery of the cost and sustaining CapEx reductions mentioned earlier; managing increasing price volatility through optimizing our plant operations, hedging and delivering on grid-scale battery growth; and successful recontracting of short, midterm gas suppliers. In customer markets, we're focused on continued organic growth in services to customers; delivery of significant sustained cost efficiencies; successful integration and optimization of recent acquisitions; and growth in our commercial industrial segment, expansion of our energy solutions to then offering to take a leading market position in that area. We are also continuing to build on our track record over the last 2 decades of investing in a renewable energy future. In the past few years alone, AGL has directly invested around $2 billion in firmed renewable projects, including over $180 million in the construction of the 250-megawatt Torrens Island battery. The battery will support the growth of intermittent renewable energy in South Australia and will be the first to begin construction within AGL's planned 850-megawatt national battery rollout. Before turning to the earnings outlook for FY '22, I'd like to briefly highlight some positive news for our shareholders from FY '21. We made some significant acquisitions throughout the year, which will help drive our growth ambitions. We successfully migrated more than 200,000 Click Energy and Amaysim customers to AGL during FY '21, following the acquisition of Click Energy in September 2020. In March 2021, AGL acquired 2 of Australia's largest commercial solar businesses, Solgen and Epho. These acquisitions complement and strengthen AGL's existing solar capabilities, enabling AGL to deliver more tailored and innovative energy solutions for businesses. Also in March, AGL acquired 51% of OVO Energy, Australia, which has provided AGL with exclusive Australia access to Kaluza, OVO's advanced customer experience and energy flexibility platform. We have also, through our 20% interest in PowAR, recently acquired interest in the Tilt Renewables. This transaction will further support our orderly transition away from coal-fired generation. Today, we confirm the earnings outlook for the 2022 financial year as being within the range $220 million to $340 million provided as part of the full year -- financial year '21 results in August. I recognize that this guidance represents a material reduction on FY '21, which reflects, again, a material step down in wholesale electricity earnings as hedging positions established when wholesale prices were materially higher progressively roll off and the nonrecurrence of Loy Yang insurance proceeds. I'll now talk about what we are doing to address the challenges currently facing AGL's business. The cost, capital management and growth measures I have already outlined are important measures that are needed to improve business performance amid challenging market conditions. However, your Board recognizes that the pace of change continues to accelerate, reinforcing the rationale for our proposed demerger. We are creating 2 distinct businesses that will be category leaders in their own areas, with AGL Australia as Australia's largest multiproduct energy retailer of essential services and Accel Energy as Australia's largest electricity generator. The proposed demerger will give each business the freedom, focus and clarity to execute their own respective strategies and growth agendas while playing an equally important but different role in Australia's energy transition. The Board considers the proposed demerger will be in the best interest of shareholders by protecting shareholder value and enabling each business to focus on their respective strategic opportunities and challenges presented by the accelerating energy transition. I'd now like to take a few moments to discuss a few Board matters. At the conclusion of the AGM, John Stanhope will retire from the Board. On behalf of the Board, I'd like to sincerely thank John for over 12 years of very invaluable service to AGL. Jacqueline Hey will retire by rotation at the end of the meeting and is standing for reelection at today's meeting. For the reasons set out in the Notice of Meeting, the Board recommends that shareholders vote in favor of the reappointment of Jacqueline. Also standing for election to the Board is Ashjayeen Sharif, a retail shareholder who has nominated himself as a candidate for election. For the reasons set out in the Notice of Meeting, the Board does not consider the election of Mr. Sharif to be in the best interest of the company and recommends shareholders vote against the appointment of Ashjayeen Sharif. However, the Board does recognize that further skills and expertise in climate change risk, ESG governance and industry transition are required on the AGL Board. And the search process is underway to appoint a new director with the requisite skills and experience. We are on track to appoint a new Board member with those skills in the first half of FY '22. In addition to appointing an additional director to the AGL Board this year, we recognize that additional skills will also be required on the Boards of each of Accel Energy and AGL Australia. Following the update of the AGL Board skills matrix in FY '21, Board skills matrices for Accel Energy and AGL Australia were prepared, and we have also consulted with and received input from a number of investors and other stakeholders on the appropriate skills required for the new entities going forward. In particular, skills and experience in energy transition, ESG, technology, customer experience, project development and finance have been identified as priority areas. The Board is currently undertaking a search process for directors with these skills with a view to appointing some additional directors to AGL Energy ahead of the demerger, but also to ensure that each entity is well placed to appoint additional directors following the demerger. I'll now speak briefly about 2 resolutions that we received from a small group of shareholders for consideration at the AGM. These are items 6A and 6B in the Notice of Meeting. The Board respects the right of shareholders, of course, to put forward resolutions. However, the Board does not consider these resolutions to be in the best interest of AGL for the reasons detailed in the Notice of Meeting, and the Board recommends that shareholders vote against these items. Item 6B is contingent on the outcome of item 6A being the special resolution to amend AGL's constitution. Based on the proxy and direct votes received ahead of the meeting and the number of votes that I have been informed are represented at this meeting today, item 6a will not receive sufficient support from shareholders to be passed, and therefore, as advised to shareholders in the notice of meeting, item 6b will not be put to the meeting. However, we recognize that item 6b has received a level of support from shareholders ahead of the meeting, and we will give shareholders an opportunity to ask questions about these resolutions later in the meeting. I want to assure shareholders that AGL takes the matters raised in the shareholders' resolutions, item 6a and 6b, very seriously. And they are matters that the Board considers -- continues to consider very, very carefully. Item 6b requests the Board disclose, in association with the forthcoming demerger scheme documents, short-term -- short-, medium- and long-term targets for reductions in Scope 1, 2 and 3 emissions of the proposed demerged company as for both Accel Energy and AGL Australia. And those disclosures are aligned with Articles 2.1(a) and 4.1 of the Paris Agreement. Details of how Accel Energy and AGL Australia's capital expenditure, sustaining and growth transformation capital will align with those targets; and details of how Accel Energy and AGL Australia's remuneration policies will incentivize projects -- progress against those targets. AGL understands the critical importance of the decarbonization of the electricity sector and the need to lean in to the transition as never before. We also already operate the largest portfolio of renewable assets of any ASX-listed company. And we have invested more than $2 billion directly in renewable projects. It's often easy to simplify the challenges facing Australia's energy industry. Renewables have grown at record pace and ageing thermal assets are playing a diminished role. AGL and its proposed demerged entities will work with governments, regulators and other stakeholders to define a responsible pathway to transition to a decarbonized electricity sector as soon as practical. We are already putting this into action by proceeding with the closure of the Liddell power station which commences next year and will lead to a 23 percent reduction in emissions by the end of 2024. We are also actively engaging with all stakeholders to understand their perspectives and concerns. The success and speed of the transition will require an effective level of coordination between government, regulators and industry, and the Board does not believe it is in the best interest of AGL to make this commitment unilaterally. The task is to create a glide path rather than a crash landing in this transition. It will require the right policy and investment settings and a focus on customers from all market participants. It will also require a market design that supports an orderly transition. Despite the challenges and uncertainty facing the energy industry, AGL has already made a number of commitments in relation to climate change, including a commitment to net zero by 2050 as part of our climate statement released last year. But we know more is required, and work is underway to define the decarbonization roadmaps for both Accel Energy and AGL Australia. These road maps will be informed by a scenario analysis and will consider the settings of short-, medium- and long-term targets and will become an integral part of the strategies of these businesses. This work will include analysis and impact on our business, of commitments and related to the Paris accord, and deliberations that will come from the UN Climate Change Conference, COP 26 in November. It will inform decisions on how both companies can appropriately lean into the transition as never before. Further details of these roadmaps will be included in the demerger scheme documents to be sent to shareholders during the fourth quarter of FY '22. But there is no doubt that both new organizations will be committed to the challenge of doing more and will play a critical part in the decarbonization of Australian Energy. The scheme documents will also describe the business strategies for both entities, including capital allocation and emission targets. If the proposed demerger proceeds, Accel Energy and AGL Australia also intend to put their respective climate reporting to a nonbinding advisory vote of shareholders at their first Annual General Meeting. If the demerger does not proceed, AGL will put its climate reporting to a nonbinding advisory vote of shareholders at its 2022 Annual General Meeting. Finally, I wish to make some comments on the second item on today's agenda, the remuneration report. The Chair of the Board's People and Performance Committee, Diane Smith-Gander, will speak to the remuneration report in more detail shortly. At the 2020 AGM, 46.5% of shareholders voted against approval of the 2020 remuneration report. This resulted in AGL incurring a first strike. I want to assure you that your Board takes the feedback it receives on AGL's remuneration practices seriously. Since the 2020 AGM, AGL has consulted with stakeholders to seek to understand the concerns that led to the first strike. And these discussions have influenced the setting, assessment and disclosure of key management personnel remuneration and outcomes for FY '21. I'm pleased to say that the resolution to be put to the meeting in relation to the 2021 remuneration report has received sufficient support to avoid the company receiving a second strike. Therefore, the conditional spill resolution, item 5, will not be put to the meeting today. In summary, despite FY '21 being a challenging year for AGL, I'm optimistic about the future for AGL and its shareholders. We have a comprehensive program in place to improve performance, to lean harder into the energy transition and to respond to the evolving operating environment. In particular, the 2022 financial year will be a significant year in AGL's history as the proposed demerger is progressed. The Board is intending to hold shareholder meetings in the fourth quarter of FY '22 for shareholders to consider the demerger proposal. As I mentioned earlier, the Board considers the proposed demerger will position us best to meet existing and future challenges of the company, including through refreshed Board and management teams that are focused and have the appropriate skills and experience to respond to evolving ESG expectations, the energy transition and new technologies. It's now my pleasure to invite Graeme Hunt, your CEO, to address you. Following Graeme's address, we'll move to the formal business of the meeting.

Thank you, Peter, and good morning, everyone. It's my pleasure to be joining you today, albeit virtually, after what has been a very challenging yet pivotal year for AGL. The Chair has talked about company performance, but I'd like to reiterate how disappointing the performance of our business has been over the last 2 years to shareholders, management and your directors. I can assure you that the team and I are working as hard as we can to deliver a strategy that will protect and deliver future value for you, our shareholders. While we expect conditions to remain challenging into the next year, I am confident in our strategic direction and our team to manage the business through the energy transition and demerger. The underlying momentum of the business is strong. And amidst the challenging conditions, it is still important to reflect on the achievements and hard work over the year, from progressing our strategy to growing our business, all while adapting to the new ways of working. This short video provides a snapshot of the team's work. [Presentation]

The Chair has provided a summary of our FY '21 results, touched on business performance as well as confirming our guidance for FY '22. Today, I'll provide more detail on operational performance, strategy execution and outlook as well as recap our proposed demerger plans. But first, let me focus on safety. I am pleased to say that there was an overall improvement in our health, safety and environmental performance, illustrated by a marked reduction in total injury frequency rate to 2.3 per million hours worked, which has now trended lower in consecutive years. However, it is critical that this improvement in total numbers of injuries and severity of those injuries does not lead to any reduction in the drive towards a 0 injury workplace. The need for this ongoing rigor was reinforced in late 2020 when one of our people was seriously injured in an incident at the Liddell power station. We are very thankful that this employee is recovering well and has commenced the return-to-work process. Safety remains our utmost priority, and we continue to thoroughly review high-risk tasks and strengthen our safety protocols to support the drive towards 0 injuries. Another key focus for AGL is employee engagement. Our FY '21 employee engagement score fell 11 percentage points from the previous year. Albeit disappointing, this result was understandable given the significant challenges in energy markets, ongoing challenges presented by COVID-19 fatigue as well as uncertainty arising from our demerger plans. We are working hard to address engagement through a strong internal communication as well as the timely establishment of new organization structures to provide our staff with greater clarity. Moving now to our operating and financial performance. We know this has not been good enough and understand that we need to do more to protect shareholder value. With that said, I'd like to take you through some of the conditions under which we have been operating. FY '21 was certainly one of the toughest energy markets have seen. Wholesale electricity prices were at levels not seen since 2012. Energy demand was impacted by ongoing lockdowns in our major capital cities, mild weather and increasing penetration from rooftop solar. While at the same time, energy supply increased through the connection of large grid-scale projects. The confluence of a decrease in demand and an increase in supply have applied material pressure on wholesale electricity prices over the year. We also saw challenges in our wholesale and gas business as low-cost legacy supply contracts matured, which translated into lower margins. AGL has a highly flexible gas portfolio, and we will continue to execute on our supply strategy to meet customer demand from existing and new domestic supply sources as well as proposed third-party gas import projects. AGL also continues to competitively recontract medium-term volumes to augment the gas portfolio as a consequence of the proposed import project at Crib Point not proceeding. In response to the challenging operating environment and resulting impact on the company's financial performance, we are pursuing initiatives to preserve liquidity and ensure we have sufficient financial flexibility. These measures include a commitment to deliver $150 million of sustainable operating cost reductions by FY '22 and $100 million reduction in sustaining capital expenditure by FY '23. These targets are in addition to the capital preservation from the termination of the special dividend, the full underwrite of the final dividend and the announced sale of approximately $400 million of noncore assets. To deliver on our strong OpEx and CapEx targets, operationally, we are thinking differently about how we run our coal-fired operations. Today, rather than maximizing generation across the year, we are focused on maximizing our generation when demand is at the highest levels. This means the plants don't need to be available all of the time, and we can optimize maintenance schedules and costs. As such, we are working on ensuring our preventative maintenance is efficient and scheduled in off-peak periods, while making our plants as efficient and flexible as possible. These changes will not only ensure our plants are efficient, but also that our plants are responding to the transition of our energy system. We have taken steps to make our plants more flexible. We have lowered the minimum generation levels at Bayswater to reduce the run periods when demand is low and spot prices are below our marginal running costs. We're also developing digital models at both Bayswater and Loy Yang to optimize operations. We continue to further assess options to improve plant efficiency, and we'll implement additional initiatives throughout this financial year. In customer markets, our previous investment in systems and our ongoing focus on simplification and digitization continue to deliver sustained operating cost efficiencies, assisting in the delivery of our cost targets. Despite the challenges we have faced this year, AGL has continued to deliver on its strategy. Customer service growth remained strong in FY '21. Over the year, we added 254,000 new services through good organic growth and the Click Energy acquisition, maintaining our status as Australia's largest energy-led multiproduct retailer. Against the backdrop of a highly competitive market, we maintain low levels of churn, while our strategic Net Promoter Score reached a new record high. Customer operating costs were also driven lower for second straight year on the back of material reduction in ombudsman's complaints and a greater proportion of our customer base utilizing our digital channels. AGL's telecommunication products were launched in February this year, and we are already seeing steady growth and the anticipated benefits of customer loyalty, multiproduct growth and tenure coming to fruition. Notably, 98% of AGL's telecommunication sales to date are part of an energy telco bundle. In addition, we have expanded our carbon-neutral offering across all AGL products, with over 260,000 carbon-neutral services now in place. During the year, we also announced a number of key acquisitions to support our growth ambitions and decarbonization pathway. The acquisitions of Solgen, Epho and Tilt via our 20% interest in PowAR have added customers, expertise and access to quality renewable generation. These acquisitions also build on our long-term history of investment in renewables and support our commitment to transition away from coal-fired generation. We remain on track to deliver on our plans for at least 850 megawatts of grid-scale batteries by FY '24. During the year, a final investment decision was reached on a 250-megawatt Torrens Island battery and good progress was made on the Liddell and Loy Yang batteries. This energy storage infrastructure positioned at our strategic sites will be critical in helping to firm renewable generation entering the National Electricity Market. Participating in these acquisitions and development strongly aligns with the commitments set out 1 year ago in our climate statement, representing the next steps in our decarbonization journey. And I'm pleased to say that we have made progress in each of our 5 climate statement commitment areas, which will not only help us on the path to net zero emissions by 2050, but also in challenging ourselves to aim higher. We believe we can deliver on our leadership role in accelerating energy transition while also ensuring our thermal assets remain available for as long as they are needed to support the affordable, stable and sustainable provision of electricity. And as we and the market develop sufficient renewable electricity generation. Now turning to our outlook. As the Chair noted earlier, our short-term outlook remains challenged, and our guidance for FY '22 largely reflects the continuation of market and operating headwinds, which have impacted energy market in recent years. As such, we expect the year-on-year decline in overall earnings to be driven by a material step down in wholesale electricity earnings as hedging positions established when wholesale electricity prices were higher progressively roll off and a small impact to wholesale gas gross margin from maturity of low-priced legacy gas supply contracts. In addition, the Loy Yang 2 insurance proceeds received in FY '21 will not reoccur. These impacts are expected to be partially offset by the $150 million of targeted operating cost initiatives, which we are working very hard to deliver. Markets continue to experience market volatility. Prices have fluctuated significantly and demand continues to be impacted by both COVID-19 lockdowns and milder-than-usual weather conditions. These factors will continue to impact our business as we navigate COVID-19 and the transition away from coal-fired power towards firmed renewables. Encouragingly, we have seen some improvement in forward wholesale electricity pricing in recent months. And given that AGL produces some of the lowest cost generation in the National Electricity Market, we are well positioned to benefit from any sustained recovery in wholesale electricity prices, the single biggest driver of AGL's earnings. As we see the pace of change continuing to accelerate in energy markets, we are further assured and committed to our proposed demerger strategy to create 2 new entities, both with the clarity of purpose and agility to lead the energy transition in their own ways while protecting and delivering value for shareholders. AGL Australia would execute on its customer-led multiproduct strategy backed by a flexible trading, supply and storage position. And Accel Energy would ensure the safe and efficient operation of our thermal generation asset base as required by the market, actively engaging on policy matters relating to the energy transition and partnering with other entities to transform our strategic operation sites to low-carbon industrial energy hubs. I am pleased to say that good progress is being made on our demerger plans. The internal separation of our IT systems and key corporate functions are advancing, further key management personnel and high-level organization structures will be announced in the coming months, and we are progressing the funding and capital structures for both entities. Importantly, you, our valued shareholders, will have the opportunity to consider and vote on the proposed demerger at a scheme and general meeting expected to be held in the fourth quarter of FY '22. A scheme booklet containing detailed information about the demerger and the 2 proposed entities, including their expected asset allocation, capital structures, energy transition plans, will be sent to you prior to the scheme meeting. This will also include information on how you can vote on the proposal. This is a very challenging time for electricity generators and retailers, and AGL must effectively deal with these challenges. The proposed demerger is certainly focused on addressing these challenges and charting an exciting next chapter in our 180-year plus history. In closing, this difficult operating environment we are facing will continue to test our resilience as an organization. However, I'm confident that the decisive actions we are taking today will enable us to protect shareholder value as we create 2 leading organizations and prepare for a cleaner, more sustainable future. I'm immensely proud of the dedication and the hard work of our people during these challenging conditions, and I assure you we will continue to strive to deliver for our customers, communities and most importantly, you, our valued shareholders. Thank you.

Thank you, Graeme. It's now time to address the formal business of the meeting. The Notice of Meeting sets out 6 items of business. As outlined in the Notice of Meeting, Item 5 and item 6b are contingent resolutions. As I mentioned earlier, item 5, the conditional spill resolution, will not be put to the meeting because the company did not receive a second strike in relation to the 2021 remuneration report. Item 6b is contingent on the outcome of item 6a, being the special resolution to amend AGL's constitution. Given the proxies received for the resolution to amend the constitution and the votes represented at this meeting today, item 6a will not receive sufficient support from shareholders to be passed, and item 6b will not be put to the meeting. However, shareholders will have the opportunity to speak on or ask questions about each item of business, including item 6b. And the proxies for each item will be shown and released to the ASX. Votes will be counted immediately following the meeting, and the results will be notified to the ASX before the end of today and posted on the company's website. Turning now to the first item of business. AGL published its 2021 annual report in August, which contains full information about the company's financial and operating performance during the year. Under the company's constitution and the Corporations Act, there is no requirement to our shareholders to vote to adopt the accounts. However, you may ask questions or make comments on the 2021 annual report and the management and performance of AGL. As I mentioned earlier, Jason Thorne from Deloitte is available to answer questions relevant to the audit, and a copy of the written questions Deloitte received ahead of the meeting are available on the platform under the Documents tab, if any shareholder would like to review them. I will now ask Jason to outline the questions received by Deloitte ahead of the meeting which Deloitte determined to be relevant to the content of the auditor's report or the conduct of the audit and Deloitte's responses to those questions. Jason?

Thank you, Chairman. As previously stated, the company has received a written question from a shareholder in accordance with Section 250 PA of the Corporations Act 2001. In our capacity as auditor, we have provided a question list to the company that has been made available to members on the virtual platform today. The questions outlined on the question list does, in our view, relate to the conduct of our audit for the year ended 30 June 2021 and the content of the audit report as provided for in Section 250 PA1 of the Act. And accordingly, Deloitte welcomes the opportunity to respond to the question. Before responding to the specific questions, to convey the context within which our response is provided, I direct you to our independent auditor's report on Page 173 of AGL's annual report. In addition to providing our opinion, our report describes the basis for that opinion, the key audit matters, the responsibilities of the directors for the preparation of the financial report and our responsibilities for the audit of the financial report. I will now respond to the question. Auditing standards require in order to identify and assess risks of material statement through understanding the entity, its environment and its internal control, thereby providing a basis for designing and implementing audit responses to the assessed risks of material misstatement. Amongst others, we identified risks of material misstatement in relation to the quantum and timing of impairment charges, the quantum and timing of onerous contract provisions, both of which arose as a consequence of the accelerated deterioration to long-term wholesale energy market forecasts subsequent to 30th of June 2020; the quantum and timing of changes to AGL's environmental rehabilitation provisions, which were an outcome of AGL's 3 yearly review of those environmental rehabilitation provisions; and the associated disclosures made in the financial report. Our assessment of the risks of material misstatement included consideration of the time frame over which the accelerated deterioration to long-term wholesale energy market forecasts had occurred, and therefore, the appropriateness of the period in which the impairment charges and the onerous contracts were recognized. It also included considering the appropriateness of the timing of the recognition of the outcomes of AGL's 3 yearly review of its environmental rehabilitation provisions. We then designed and implemented audit procedures to respond to the assessed risks of material misstatement. These responses are described in the Key Audit Matters section of our audit report along with the reference to the disclosures made by the company. Upon completion of those audit procedures, we issued an unmodified independent auditor's report. That concludes my response to the questions outlined in the question list. I will pass back to you, Chairman. Thank you.

Thank you very much, Jason. I'd now like to open the meeting for discussion. Please Liz, could you please let me know if there are any questions relevant to this item?

Thank you, Chair. There are questions. The first question comes from Helen Manning of the Australian Shareholders Association. How should retail shareholders look at the company going forward? What benefits are there in owning AGL shares?

Thank you, Helen. Thank you for that question, and thank you for the Australian Shareholders Association for showing continued interest in the company. To answer that question, I think I need to give some context to give you a view about the excitement that we feel is -- and certainly, I feel towards the future of the organization. As many of you are aware, AGL's had some very successful years built on acquisitions that were made of generating plants in the last decade, and building what was called or is called a vertically integrated company with generation through to trading through to customers. The changes and market forces that are now applicable to AGL are very different. The vertically integrated model provided us with record profits 2018, 2020 and over $2.6 billion was returned to shareholders in terms of share buybacks and dividends during that period of time. The model worked. The model now is not, in my -- our view, as a Board, applicable to the future of the organization. The model has to address the very rapid transition away from fossil fuels into renewables. And despite having the largest renewable portfolio on the ASX, the implications of having a combination between coal-fired generation and renewables, the access to capital that, that means into the future and the direction and policy settings that are appropriate for carbon-heavy coal-fired generation versus renewables and customers are actually very different. On that basis, our share price, which is not acceptable in anybody's terms over the last 12 months, is reflective of a number of things, and Graeme has mentioned that. The overarching influence on share price is the value of electricity, wholesale electricity prices that give us revenue as an organization. Back in the heyday not too many years ago, electricity prices were in the high $80s, $90, $100 a megawatt hour. And in the last 12 months, due to a greater level of supply, uncertainty on policy direction and a lack of clarity around the glide path that is the progressive decommissioning of coal-fired generation, the electricity prices dropped enormously, going from $95 to $100 a megawatt hour down to in the order of $35 to $40 a megawatt hour. Although Graeme has highlighted, there's been a pickup of that number in recent times. There is -- it's still a significant impact on our revenue streams. AGL's share price is absolutely a bellwether for energy pricing. And on that basis, although we see relatively subdued activity in terms of pricing over the next few years, moving beyond that, the pricing will be absolutely dependent on how the transition away from coal-fired generation and how fast the renewables generation picks up. However, at $35 to $40 a megawatt hour, no one will be making any money. And it's hard to demonstrate a real compelling investment case unless there are sustainable higher pricing. So coming back to the question, why do you invest? And what do you see in AGL? Well, firstly, we believe the separation of the 2 businesses, the renewables and customer business, away from the carbon-heavy business is one that is logical and compelling in present market circumstances and how the market is moving. Coal-fired generation will remain an absolutely critical part of stability on the National Electricity Market for many years to come. Right now, the capacity of other generation, including renewables, to make up the shortfall when the sun goes down and the wind doesn't blow, it's just not there for us to be able to withdraw and shut down our coal-fired generation without proper coordination with regulators, with governments and sustaining a reliable, affordable supply of electricity to our customer base. So we think Accel Energy, being the core company to generate from coal, will be a critical element of the future and will have a substantial role in managing the transition away from hydrocarbon generation. It will be very much subject to where you think coal prices and -- sorry, electricity prices will go. And we think in the medium and long term, that is likely to be higher than it is on a historical low that we've seen in the last 12 months. Accel Energy also has the ability to leverage its significant real estate in terms of connections, it's talented workforce, and it has the capacity to build on, in an unprecedented way, energy hubs that can drive renewables within the real estate that it turns with the connections it has, and that would utilize capital from ourselves and from partners. If you look then at AGL Australia, AGL Australia has an unprecedented customer base of close to 4.5 million value-creating business that is substantial. It will also have connections initially in offtake agreements to Accel, but it also will have the strategies and mandate and flexibility to continue to drive the renewable transition. And we'll attract, we believe, the appropriate capital, which Accel Energy will struggle to do into the future, with the appropriate capital and multiple that will drive the value in AGL -- in AGL Australia's share price. We think separation is the way forward. We also believe that the vertical integrated company is probably something of the past. And driving that transition will give both entities' leadership, in one side, carbon-heavy business and the transition and an active role in leading that transition with a view to electricity pricing and energy hub development; and on the other side, the renewables with substantial access to capital and a different multiple and a different direction. Now both companies have a slightly different or fundamentally different attitude to some of the regulatory changes that we think are necessary. So again, the separation into 2 companies with distinct value upside is absolutely the way forward and addresses the significant challenge of the transition over the next 15, 20 years. So I'm excited about the future of AGL. I'm extremely disappointed with the performance in the last 12 months. And clearly, the accelerated transition requires us to move to different models and drive our business in different ways. And I believe the way forward, enunciated with the separation, is the way forward for AGL. I should say that this opportunity through the AGM is one for shareholders to express the frustration for the Board to take its medicine but also an opportunity for the Board to highlight the direction going forward with the company. And I'd like to take that opportunity over the next short while to at least give you the direction, the reasons behind performance or lack of and the commitment that we, as a Board, have to turn AGL, a great company, into an even better 2 companies addressing the transition. So hopefully, that gives you some context telling as to why you should own shares. And the next, obviously, 12 months or so are critical in our future. But the core assets that we hold, whether it be generation from coal or a very substantial renewables portfolio, it is a fantastic platform, along with our customer base for future growth in our business and to allow us to drive the changes in the best interest of our shareholders.

The next question is from Helen Manning of the Australian Shareholders Association. Shareholders will be wanting to know why AGL is asking to be split. Given that we will be given more detail with the demerger documents, can you explain quite simply now why?

Well, Helen, thanks again for the question. Probably I've answered that second question with my response, which answered, hopefully, your first question. We think the evolution of our business does require us to split the carbon-heavy piece of that business, the coal-fired generation, away from our renewables business and customer base. There are compelling reasons to do that, including differences in the way we would like to see both sides of the business in terms of regulation. And there's compelling reasons for our renewable and customer piece to command a higher level of access to capital and a different -- and trade at a different multiple. Accel Energy definitely has an upside in its exposure to the power pricing and its unprecedented real estate value in terms of building energy hubs in our key areas. We have a great workforce, and we need to work with our workforce and communities to help them best address the transition as well. But certainly, we have all the prerequisites along with our partners to drive growth in that area as well. Details of that undoubtedly will be provided in the scheme document. But I also think -- and Graeme signaled that we would be taking further advice and input from our shareholders and other stakeholders in the lead up to the publishing of the scheme document. And we think it's critical to -- and value-adding to have that input from shareholders as we go through this evolution of this great company.

The next question is from Dan Gocher of the ACCR. It appears that the share price is in free fall, declining 45% since the demerger was announced in March and 80% from its high in early 2017. What are the Board and the senior executives doing to arrest this decline? Is AGL's timidity around the early closure of its coal-fired power stations coming at the expense of shareholders' best interests?

Thank you, Dan and ACCR, for the question. I'll reiterate that the impact on share prices of the company are multiple. And the core impact for 2021 was undoubtedly the very significant drop in wholesale energy pricing, which impacted our revenue streams for the year. Other factors that drove share prices were soft offtake, obviously from -- due to COVID lockdowns, the ongoing and growing impact during the day of renewables and a broad supply substantial supply of electricity at various times during the day, which again has driven down pricing. I think some of the initiatives that have been put forward by government has also led to uncertainty. And there's no doubt that the sensitivity of major investors towards carbon-heavy assets and investments in carbon-heavy companies has also led to some reticence to investor and certainly is starting to constrain capital that might be used by carbon-heavy industries, including AGL. I suppose the key area that I'd like to highlight is that a shareholder wrote to me in a letter a couple of days ago and pointed out that on the 15th of September, 10 p.m., only around 8% of the electricity on the NEM was being provided by renewables and some 80-plus percent of the NEM was being provided by coal-fired generation. And whether we like it or not, coal-fired generation is a critical part as other generations, especially focused on renewables and firmed renewables is built. A KPMG report 18 months or so ago highlighted that to remove -- or take fossil fuel generation down to 20% of the NEM would require some $50 billion in investment in renewables to allow that to happen. We believe we need to lead into the transition as never before. And on that basis, we are carrying out the appropriate analysis to be able to provide the strategy and direction together with appropriate goals into the future for us to apply Paris Agreements and into our capital allocation and our rewards for our people. On that basis, I think the application of early closure of its coal-fired stations is not necessarily a big driver right now for us with respect to share price performance. Other factors are clearly more applicable, albeit that I believe the Board is -- absolutely won't mind to work hard to provide much greater clarity about that transition but work with other stakeholders, state governments and others to assure a smooth landing and a smooth transition.

The next question is from [ Mr. David Rosita ] and [ Mrs. Catherine Rosita ]. AGL recorded staggering impairments in FY '21 while the share price has continued to free fall. The company's current plans and therefore valuations for its coal-power assets are aligned with a 3-degree Celsius plus warming scenario. In other words, predicated on the failure of the Paris Agreement. I know investors have been writing to companies and governments demanding financial accounts be aligned with global climate goals. So how much more value destruction can shareholders expect to see when the value of AGL's coal assets is brought into line with a 1.5-degree Celsius warming scenario?

Well, firstly, thank you, [ David Rosita ] and [ Catherine Rosita ] for your question. You're right. There were significant impairments recorded in FY '21, driven significantly by a change in value of our renewable power purchase agreements, which were signed between 2006 and 2012 at higher levels of pricing. And it undoubtedly was a response to much, much lower electricity pricing and force that change in valuation. We have made a commitment to be carbon neutral by -- or emissions neutral by 2050. And I would dispute that our coal-fired assets are aligned to 3 degrees C plus warming scenario. And certainly, we remain very committed to doing our role to meet Paris Agreements. We've made a commitment earlier today to -- and prior to that in discussions with shareholders that we have made a commitment to review all of that, and no changes even as late as the COP meeting that's coming up in Glasgow over the next couple of weeks into our modeling. And as part of the overall direction of the companies, both AGL and Accel, we will be publishing our strategy. And undoubtedly, our strategy was -- with respect to how we manage the transition that we will push for a glide path in this process and how our commitments will align with Paris. We're very, very well aware that the expectations of investors and shareholders generally are changing significantly in this space. And we're, right now, doing all the work necessary to make informed views before publishing those strategy on behalf of the 2 companies. So I think we're making progress on that with more to come prior to and in the scheme document. And undoubtedly, the scheme will be a quasi comment on our direction with respect to climate change and our role in the transition.

The next question is from [ Mr. Andrew McPherson ]. On 8 September, Macquarie Bank disclosed it has been shorting AGL shares. At the same time, it is the underwriter of our dividend reinvestment plan. This morally questionable and duplicitous behavior gives rise to a serious conflict of interest, in my opinion. While Macquarie may argue they're simply hedging their downside from a potential DRP shortfall, I believe it's more likely about Macquarie making proprietary trading profits for itself ahead of its corporate client, AGL's best interest. By shorting the company's shares during the DRP pricing -- price-setting period, Macquarie effectively drives down AGL's share price, further undermining shareholders' confidence in AGL and willingness to take up the DRP, thereby allowing Macquarie to profitably cover its short position with a larger-than-normal shortfall of DRP stock at suppressed prices. My question to the Board: One, do you think this behavior is acceptable? And two, do you think we should use Macquarie's services in the future?

Andrew, thank you for your comments. I would like to reiterate that I think the process that Macquarie is doing with the DRP is one that is standard banking practice during the price setting. I think accountability for doing the DRP has to come back to the Board rather than Macquarie, albeit the mechanics of these things do require them undoubtedly to cover their risk with appropriate shorting. The reality is that this is -- I think was a very difficult decision for the Board to go ahead with a DRP as it's interesting to receive input from shareholders that highlight the differential interest that people have around receiving a dividend. Will we use Macquarie into the future? Macquarie is, like all investment banks, subject to competition from other people who can provide services. We continue to look at that and pick the best people for the job. As I say, I think the process with the DRP has led undoubtedly to share price weakness. But in reality, to the story around the core future investment in AGL, remains extremely strong. So I would encourage people to take it up.

The next question is from [ Mrs. Helen Costa ]. I initially invested with AGL as I was led to believe that the company was taking steps towards renewable energy and then it was carbon neutral, something that is very important given the dire predictions for the future of our planet posed by climate change. I now learned that AGL relies on coal to source over 80% of its energy and plans to rely on coal until 2048. How can this stance be regarded as consistent with its claim to be climate neutral? Isn't it the real test of climate neutrality and acting on climate about how high the renewable energy percentage is and taking steps to move away from the use of fossil fuels much sooner than 2050?

Helen, thank you very much for your question. The reality for AGL is and we haven't hidden any of this is a significant part of AGL is presently based on coal-fired generation. I think we make up somewhere around 30% of the NEM in terms of our capacity to provide power from coal. We've highlighted that that's not a long-term sustainable position for the company, and that we've made a commitment to be carbon neutral by 2050. The reality is that we need to make an orderly transition from coal to other forms of energy, and do that in conjunction with the reality that our generation is still required on the NEM. I highlight that we're the largest -- we have the largest renewable portfolio on the ASX. And I also highlight that the Board is leading in through its different direction with respect to company structure, leaning into this transition as never before. And we certainly are reviewing what can be done both through Accel Energy and AGL Australia in terms of redoubling our commitment to that transition from a different stance, Accel to AGL Energy. So I -- we -- this remains work in progress, but one that we are making material progress on.

The next question is from [ Mr. Mamoon Reza ]. AGL's plummeting share price can't simply be attributed to market conditions as other energy companies have fared better over the last 12 months. Why is the share price still falling? And what will the Board do to earn back shareholders' trust that they can revive the company and restore the share price?

Thank you for your question, Mr. Reza. Look, our plummeting share price has been covered in some of the discussions I've had before. In actual fact, our peer group or some of our peer group within the market have also seen substantial changes to their share price not too dissimilar to us. And that's their people with different portfolios and other ways of managing the present transition risk. Look, we've outlined where we think the direction of the organization is going. We are committed to the demerger of our 2 entities and separating the coal-fired generation primarily with its upside in energy hubs away from our customer base. So renewables, we think, that is the way forward and will allow each of those companies to appropriately address the challenges of transition to a different and decarbonized Australia. It also allows a very coherent direction and discussion with various stakeholders to drive that transition in an orderly way. I think the direction is one that will deliver shareholder value in the medium and long term and appropriately address the insensitivities of the transition with many of our shareholders and investors.

The next question is from [ Mr. Alastair Anderson ]. What is AGL's stance on nuclear?

At the moment, we have no nuclear and no study of nuclear activity or nuclear generation in our portfolio.

The next question is from [ Mr. Austin Hunt ]. Could you please elaborate on the speculated demerger that was proposed for 2022? Additionally, can you provide any insight into how assets and finances would be split between these 2 entities if it is to proceed?

Thank you, [ Mr. Hunt ], for your question. Look, we are, as I say, I enunciated in both my speech and Graeme's speech, about the importance of the demerger. There is material that was published on 30th of June around that time, which provides a lot of information about which assets or likely which assets go where. And there's also information around the capital splits and some of the financing that is represented within that split. There is no doubt that many shareholders want to see more information. And that information is being actively worked on and will be published around in the scheme document. There will be updates and strategy updates around that prior to the scheme document being published, but this remains work in progress. I would encourage you to look though at the information that's already been published, which is on our website. And as I say, more to come. I think we're a little disappointed it's taking a long time to get to this, but reality is some of the approvals that are needed to get the demerger happening are actually not in our control, and we remain a little cautious about the time frame that we will take to get those approvals from regulators and others. But second quarter next year is down for the time for publishing the scheme document.

The next question is from [ Mr. Stephen Mayne ]. After our share price peaked at over $26 in April 2017, it today opened at around $5.72, giving us a market capitalization of only $3.4 billion. However, we claim to have a net -- to have net assets of $5.5 billion. Does this mean further write-downs are coming? And please summarize the key covenants on our circa $3 billion in debt. Could the auditor also please comment on the $2.1 billion disparity between market value and book value?

Thank you, [ Stephen ], and thank you for your e-mail earlier this morning. I'm going to ask our CFO, Damien Nicks, to answer the question and provide any detail on the covenants. So Damien, I can see you over there. So please, if you could give your response to that one in detail.

Thank you, Chair. And good morning, everyone. Just briefly on the question from [ Stephen Mayne ], thank you for the question. When we assess the asset carrying value, we assess a number of factors, but particularly looking at the long-term cash flows of the organization. Your second part of the question is in relation to our bank covenants. I refer you to the accounts for the year where we state that we have more than $600 million in unused cash facilities as part of our debt facilities, and we continue to have strong support for our banks. Look, I won't go through all of the individual covenants within those banking arrangements, but I am happy to take those on notice. And I think Chair that answers broadly that question.

Thank you, Damien. We might move to the next question then.

The next question is from Mr. [ Robert Casamento ]. Why have the directors not issued comments or statements on AGL's -- on AGL exiting the ASX 50 on the 3rd of September? Advice by directors on the consequences of this exit is requested.

Thank you for your question, [ Robert ]. Look, we did exit the Top 50 shareholders on the ASX in early September. We believe that hopefully that, that will be a temporary time process. But reality is, too, that certain investors will readjust their portfolio because we're not in the ASX Top 50. We believe, again, the direction of the company will see us move towards that Top 50 or into that Top 50 as soon as we can.

The next question is from Mrs. [ Carol Williams ]. What is being done by AGL in the hydrogen area?

We are presently engaged with a number of parties on studying and working the feasibility of hydrogen in our energy hubs, and we'll continue to push those opportunities as where we can reasonably be. We are looking much more at green hydrogen than other types, but it's certainly an area of technology which we are pushing hard with our partners.

The next question is from [ John Kolder ]. Is AGL getting into the rooftop solar business?

Again, I'll pass this question across to Graeme Hunt, our CEO, and let him give you an update on where we're at with rooftop solar. So Graeme, over to you.

Thanks very much, Chairman. We have been involved in rooftop solar for many years at different levels. But as covered in both my speech and the Chairman's speech, during this past year, we acquired 2 of the leading solar installers, Solgen and Epho, that are involved not only in rooftop solar in residential but at an industrial commercial scale, which we think is obviously a developing market. So rooftop solar is and has been a part of AGL's activities for many years.

The next question is from [ Jane Gavan ]. If Tomago Aluminium smelter follows through with its plan to go 100% renewable by 2029, doesn't this mean Bayswater power station is rendered economically unviable? What is the plan to provide renewable energy to retain Tomago's business?

Thank you, Ms. [ Gavan ], for the question. We undoubtedly are already in discussions with Tomago for the long-term supply of power to its business, renewable power and a combination of whatever they require. Tomago is a very significant customer to us, and those discussions are ongoing. And certainly, we're aware of their sensitivities and are working hard to provide options for them at a competitive price for the future.

The next question is from [ Kevin Daly ]. Accel Energy is likely to be treated in the media as a prior company no matter what it proposes to do, for example, Accel Energy, Australia's largest emitter. Is there any chance that AGL will operate a sale facility so that shareholders will not have to actually receive Accel Energy shares?

Well, first off, I would not characterize Accel Energy as a prior. It is doing a role for the NEM, which is an essential part of the NEM, so people can turn on their heaters and air conditioners and cook their meals every evening. I understand and AGL is already seen as the largest emitter in Australia. And we've outlined ways that we think we can reduce our footprint in that way and transition to other forms of energy appropriately as well as providing responsible supply of power, which is required to the market. I think I've outlined a lot of the plans that we anticipate or we are pursuing right now. And it will be whatever it will be in terms of that strategy and the timing of that transition, which we're working on right now. I would hope that you'd see value in Accel's share price and have confidence in that transition.

The next question is from Mr. [ Scott and Tracy Andrews ]. Can we expect that a dividend will be paid in FY '22?

Yes.

The next question is from Mr. [ Kevin Daly ]. What is AGL's attitude to the idea of capacity payments being considered by COAG at the moment?

Well, thanks for the question, [ Kevin ], and appreciate it. This just highlights a little bit of a difference between if you're a coal-fired generator, you would see that part of the orderly transition could include capacity payments to keep coal-fired generation in the NEM as a required part to supply power as and when needed. If you were in the renewable space in AGL Australia, you might not be so committed to such a move. And I think what we're seeing in the government and regulator space is a, unfortunately, a continuing lack of cohesion around what works and what doesn't work. But there's been very good and active dialogue about the future of the NEM after 2025, and we look forward as AGL and Accel to play a significant role in helping to come promote sensible solutions for that.

The next question is from [ Benjamin Gallet ]. Why is Accel Energy receiving such a large share of AGL Energy upon demerger?

Thank you for the question, Mr. [ Gallet ]. Look, the final size and shape of the shareholding that AGL Energy may have is subject to ongoing study and will be part of the scheme document, obviously, where we will be -- obviously, we believe that a shareholding in AGL Australia will provide great levels of capital flexibility for Accel. And also, we believe that there's value -- further value accretion within that shareholding. So there are good reasons for Accel to continue to hold shares in that way.

The next question is from [ Deborah Ann Sykes ]. Tomago are pledging to go 100% renewable by 2030. Why aren't we?

Well, as I say, I think the reality is that you have to have a regular and reliable supply of power, and Tomago is one of the largest power offtakers on the NEM. Whether that can be done completely by renewables in 2030, we're sitting down with Tomago and seeing how that possibly can be achieved and how we can play a role in providing them with ongoing power supply.

The next question is from [ Deborah Ann Sykes ]. Has the Board sufficiently planned for the pace of change still to come, including a 100% renewable grid by 2030?

I think the pace of change, undoubtedly, is accelerating. And a key part of that is the attitude taken by investors and banks towards driving change. And certainly, we see that and want to be part of that change and are adjusting our business strategies accordingly. I believe it is very challenging to have 100% renewables on the NEM by 2030. That's not something that the regulator sees as being likely or possible. But certainly, the timing of renewable and size and shape of renewable on the NEM is clearly subject to a lot of discussion right now and the transition subject, hopefully, to a glide path of change. Whether it can be done by 2030, I'm not sure, frankly.

The next question is from [ Diane and Peter Sainsbury ]. With scheduled closure dates of all AGL's coal-fired power stations on the horizon, what financial provision has the Board made to cover the remediation costs at these locations? What is the projected quantum of remediation costs for each of the sites? And how has this been taken into account during the demerger? Following the demerger, [indiscernible] remediation costs?

Thank you for your questions, [ Sainsbury ] family. And absolutely, we are taking on board the financial requirements for the Board to cover remediation costs at these locations. A review of remediation costs was actually a part of last year's accounts, and an adjustment to that was happening. It is obviously an estimation out to when you are looking at remediation a few years out. We're very confident about what the numbers are for Liddell as we are out moving contracts right now for that work.

The next question is from [ Imogen Job ]. Banks, insurers and investors both in Australia and around the world are increasingly excluding the coal power sector with 2030 looming as a common cutoff date. Has AGL already felt the impacts of decreasing access to an increasing cost of finance and insurance? How will AGL be able to access the finance and insurance it requires to operate its coal power assets beyond 2030?

Thank you for your question, Ms. [ Job ]. Certainly, we are seeing a change in attitude of investors and financiers and, indeed, insurance companies to our business -- our carbon-heavy piece of the business. However, I should say that Accel Energy, in its discussions with its financiers old and new, is receiving very strong support from our banking group, and we anticipate that will continue. Clearly, there is also an opportunity to help us and partner with us on a number of renewable and energy hub initiatives that we see as being important for Accel. But it certainly is a factor that we are mindful of. And in part, that is a reason for the demerger to allow AGL Australia not to be necessarily painted by the same brush as Accel and give that company a greater access to capital.

The next question is from [ David and Debbie Sega ]. How did the Board consider fully the impact on the business of Carbon Border Adjustments? Won't seeking to long term -- or long coal closure time frames mean AGL is left out of the race to supply Australia's industrial customers with renewable energy?

Well, I would say that our core strategies for both Accel and to AGL Australia is absolutely to continue to supply a mix of coal and renewables in the short term but shifting heavily to renewables into the future. I believe both companies, Accel through its energy hubs and AGL Energy through its broader portfolio of renewables, are able to provide competitive -- cost competitive and reliable supply out into the future.

The next question is from [ Stephen Mayne ]. With the proposed demerger, is it right to assume that the retail consumer business will take on a bigger share of the $3 billion AGL debt because its profits are more reliable and sustainable going forward? Will it be challenging to receive bank approval for the demerger, particularly for those financiers exposed to the carbon-intense assets?

I'll partially answer that and again ask Damien to reply. He's managing the bank discussions on a daily basis right now. It's certainly, we believe, we have very strong bank support for both entities. And we see that the capital -- access to capital for both Accel and AGL Australia remains strong. But Damien, you might add to that? You're on mute.

Thank you, Chair, and thank you, [ Stephen ], again, for your question. If -- I'll refer you again back to the 30 June announcement where we talked about the split of where the debt was likely to go. And back in 30 June, we talked about $800 million going into Accel with the balance going into AGL Australia. So your position that more will go into AGL Australia is correct, and that's on the base of us working with the banks and working through what the cash flows of each of those entities will look like between now and into the future. So that is correct. Thank you.

Thanks, Damien.

The next question is from [ Mamoon Raza ]. If renewable energy source is cheaper than thermal, then why not plan to retire thermal assets and build more renewable quicker?

Thank you for your question, Mr. [ Raza ]. Look, the experience that everybody sees across the NEM is that renewables is not necessarily cheaper than coal-fired generation, certainly not for firming capacity. And as I mentioned earlier, when the prices were at $35, $40 renewables in terms of both getting money back, operating costs and a return on investment, remains challenged. It is a reality that although cost of capital for renewables may make investments in lower-returning projects reasonably attractive, we're seeing that certainly in AGL's renewable portfolio. But I think it's a [ misknowledge ] to say it's cheaper because it's almost certainly not and certainly not for firming when you have to take on the responsibilities of providing electricity when it is -- when the wind isn't blowing and the sun is not shining. Obviously, into the future, batteries and significant investment in batteries is a major part of our future. And with battery technology improving year-on-year, we anticipate that, that will become extremely competitive down the track, and we want to be a significant part of that technology.

The next question is from [ Kevin Daly ]. Instead of leaning into the energy transition, why not leave that to others while AGL seeks to spend capital in ways that generate a high internal rate of return independently of emissions?

Look, I think there is a reality -- thanks for your question, Mr. [ Daly ]. But reality is that we have people, we have community expectations and we have a role to play given where we sit in the supply of electricity to the NEM. There is -- investors are clearly critical to our future, and ongoing access to capital is critical. Private equity has a different view of life on this space. But as far as we're concerned, as a public company, we are part of the system, part of the solution and we're happy to be that way. We, as an organization, can't be immune, in my view, from the responsibilities of addressing climate change, and that's part of our core strategy and culture and direction.

The next question is from Mr. [ Jack Bauer ]. What are AGL's plans to profit from the transition to electric vehicles?

Thank you for your question, Mr. [ Bauer ]. Look, we have a number -- and one, certainly a good partnership with a number of parties that are doing EVs, and it is a significant part of growth potential for AGL Australia, and we'll continue to push hard on that with the appropriate partners to build an EV business and a supply process for that business.

The next question is from Mr. [ Jonathan Hancock ]. With a big investment in renewables in solar and wind, what plans have been put in place or considerations made to recycle the solar panels and wind turbines at the end of life expected to be about 30 years? And what provisions are being made for the cost of recycling the renewable assets?

Well, you're right, Mr. [ Hancock ]. Many of these assets are long dated. We have agreements that are in place for long-term renewables to recycle and dispose of that appropriately. But they are long dated and clearly, even the technology of how we do that is likely to change over that period of time. But we're certainly aware of the requirement for that, albeit long dated.

The next question is from [ Ms. Adel Walsh ]. "I don't want the damage [ to happen ]. How can we vote on this before more money is spent on the proposal?"

Well, our direction is clear. There will not be a capacity to vote on this before the money is spent on the proposal. We genuinely believe it's a good idea to do and it's core to our future. You have to make up your mind as to what you do with your investment. [ Ms. Walsh ], I hope we've addressed some of your concerns.

The next question is from [ Deborah Ann Sykes ]. "How can AGL claim to be carbon neutral when the power is still coming from coal? Isn't this just greenwashing? And might the company get caught out for this? I am very distressed by this for a number of reasons."

We -- our commitment is to be carbon neutral by 2050, and we are totally committed to that. And further information regarding our strategies with regards to managing our carbon emissions and exposure will obviously be part of the scheme document and the -- with ongoing discussions with a range of shareholders.

The next question is from Mr. Ashjayeen Sharif. Will AGL Australia as a demerged entity set the goal of sourcing its power from 100% renewable energy by 2030?

Look, I think that will be up to the AGL Australia Board, as and when to -- and part of our overall work with respect to setting strategies for both Accel and AGL Australia. And that will be published at scheme document latest following a number of interfaces with shareholders and other stakeholders prior to that time. The AGL Australia Board will then be accountable for those strategies and those targets. And it would be premature of me to set that now while the work is ongoing to finalize what that strategy might be.

The next question is from [ Mr. Stephen Mayne ]. What was the AGL Board's view on the widely [indiscernible] $90 billion JobKeeper program? It was very easy to qualify by just forecasting a drop of revenue even if it didn't eventuate. How did AGL play JobKeeper? And are we aware of any competitors which participated in the scheme?

I can only speak on a personal basis, [ Stephen ], on this one. And I think I'm -- I'd be disappointed that, that scheme was utilized in the way it was. I don't believe -- in fact, I'm certain we didn't participate in JobKeeper. I'm unclear whether other parties did.

The next question is from [ Mr. Stephen Mayne ]. AGL is increasingly looking like its plunging share price and excessive debt will force the need for an emergency equity raising. If this occurs, can the Board promise that it will use the [indiscernible] model with compensation for all nonparticipants [ in retail ] rights trading, similar to the 1.23 billion [indiscernible] we did at the $11 a share in 2014?

Thank you, [ Mr. Mayne ], for a question. And look, I am -- we are not able to -- I don't wish to speculate on any capital raising. I don't believe it's appropriate. We have ways and a strong capital process that's ongoing right now with our banks and financiers. And at present time, there's no contemplation of an equity raising in whatever style or shape that you have.

The next question is from [ Ashtud Investment ]. Did AGL use E.ON and Uniper as a case study for the split of AGL Energy into Accel and AGL Australia? If so, what are your thoughts on how the split of the German company performed post split?

Look. We did look at a whole range of companies and examples of how splits took place and the performance. Certainly a number of the renewables companies performed extremely well after that split, although I must say the European market is different to the one that's prevalent in Australia, but we did look at examples. And again, the renewables space and the renewables companies performed extremely well.

The next question is from [ Australian trade corporation ]. Are we losing household energy supply, thanks to rooftop solar? Does AGL have any plans to expand its market share by adding new retail and industrial customers or supplying overseas markets like Singapore?

Well, certainly we have significant plans in our strategy to build on both our retail and C&I customer base, and that is part of our strategy which will be driven by Accel Energy. We have looked at supplying certainly in gas trading to places like Singapore, but again that remains part of the strategy that will be looked at by Accel.

The next question is from [ Hilary Khund ]. From a shareholder's point of view, it is obvious that the current Board and CEO recognize the need for new directors to the Board with relevant skills for AGL's future directions as described by the Chairman in his early address, so why didn't the Board not proceed with the process of appointments in order to gain ratification at this AGM?

Thank you for your question, [ Ms. Khund ]. We have been looking. Look, getting appropriate director or directors into an organization is not a 5-minute exercise. There needs to be clarity around what you're offering. And it needs to be a comprehensive process to find the right person. We've been looking for this for a number of months. And to attract the right person, we need to take our time to find the person with the right skills and commitment to take on some of the challenges that AGL has and eventually, hopefully, Accel Energy and AGL Australia. We are very, very committed to bring on people with substantial experience on energy transition and ESG, but we also need to, for instance, replace John Stanhope [ and those ] financial capabilities and audit processes for Accel; and to look at the broad skills metrics which is appropriate for the challenges of the company's future.

The next question is from [ Patkumar Patel ]. You mentioned that it's standard practice for underwriter to use [ shorting ] in a way to cover the risk, in relation to a question asked by Macquarie shorts -- about Macquarie shorts. Can you assert your statement again and if it is at all in the best interests of shareholders?

Look. There are mechanics of -- around doing a DRP and the processes that Macquarie [ had ] using our standard practice in this space. I don't have any further comment on that.

The next question is from Peter Brooks and -- professor at the center for healthy -- health policy at the Melbourne School of Population and Global Health. The evidence of the harm posed by both the combustion of fossil fuels and climate change itself and in the form of heat-related mortality, extreme weather events, nutrition supply and respiratory illness is becoming more granular every day and already a material risk for our company. Given this, why has our company not listed litigation on health grounds as a one -- as a Tier 1 strategic risk? Will AGL commit to replacing coal with renewable energy by 2030 to mitigate these health risks in line with advice from the International Energy Agency?

Thank you for your question, Peter. And let me say we continually interface with our communities and workers over their health. And health and safety is a critical part of our strategy and culture at AGL. We continue to look at and discuss with them and -- a range of these issues, and we'll continue to do so, recognizing the sensitivity to exposures to coal-fired generation and beyond. Certainly, from a risk perspective, we do see that as a risk.

The next question...

Sorry. I'd -- I think we need to -- Liz, we're sort of -- we're an hour and a bit in and I am acutely aware that we have other things to talk about, and so I'd probably limit the questions to a few now.

No problem. The next question is from Dan Gocher. Has the Board been approached by potential buyers or received a takeover of any sort?

No.

The next question is from Mr. Ashjayeen Sharif. The Chair admitted in June that the Board did not see the pace of change coming. How can we trust the Board has sufficiently planned for the pace of change still to come?

I certainly said that we saw changes coming, but I -- don't believing many of the participants in the energy market on the east coast have seen how rapidly the direction and sentiment towards change has come. And that was also admitted by the -- a number of other corporates but also the regulator, so that is a reality. So we understand now absolutely that the pace of change is accelerating, and our strategies are absolutely designed to address that.

The next question is from [ Stephen Mayne ]. The AFR [indiscernible] the decision to have both demerged companies' headquarters move from Sydney to Melbourne because he said both CEOs prefer to live in Melbourne. Is this true? How much are the relocation costs?

Look, I think, honestly, this is a piece a piece of [ no news ]. There are substantial people in Sydney and in Melbourne. Melbourne actually has the largest number of people, from customers to trading, to administration and finance, IT. So I suppose, look, I think this is [ a no-news today ] and really doesn't have an impact on our business. And certainly any costs of relocation for the relative small number of people that move will be immaterial in the overall scheme.

Thank you, Chair. I believe you've covered the topics raised in any remaining questions.

Thanks very much. And thank you for those questions, and I hope my responses have been useful. Let me now move on to the second item of business, which concerns the adoption of the remuneration report of the company for the year ended 30th of June 2021. The People and Performance Committee assists the Board with oversight of AGL's remuneration policies. Diane Smith-Gander has been Chair of that committee since November '17. Before opening the meeting to invite questions, I'd like to invite Diane to speak to you about AGL's remuneration policy and the steps AGL has taken during FY '21 to respond to the first strike AGL received at the 2020 AGM. So I'll ask Diane to speak to you now.

Thanks very much, Peter. Good morning, ladies and gentlemen. AGL's 2021 remuneration report commences on Page 63 of the annual report. It sets out AGL's policy in respect of remuneration paid to the Board and senior executives and describes the link between company performance and executive remuneration outcomes for the 2021 financial year. It also sets out the Board's response to the first strike that AGL received at last year's AGM. As the Chairman has noted, it is clear that AGL will not receive a second strike in respect of the FY '21 remuneration report. Since the 2020 AGM, the Board consulted with a broad range of stakeholders to understand the concerns that led to that first strike. These discussions influenced the Board's approach to remuneration for FY '21, which I will now summarize. As the Chairman noted earlier, FY '21 was a challenging year for AGL. Although the executive team delivered some notable achievements against the individual objectives included in their scorecards, AGL's financial performance did not meet the threshold required to warrant any payment under the financial metric. The Board took a holistic view of the scorecard for executives and the company's performance and exercised its discretion to adjust short-term incentive outcomes to 0 for all executives despite some objectives being partially met. This was not a decision taken lightly but reflects AGL's underlying principle of aligning rewards with overall performance and shareholder experience. The Board also tested the performance conditions for long-term incentives granted in FY '19. The outcomes of both the relative total shareholder return and return on equity metrics reflected the financial performance of AGL over the 3-year performance period, with no performance rights vesting for participants. I will now summarize other key remuneration outcomes in respect of FY '21. No members of AGL's key management personnel received an increase to their fixed remuneration during the 2021 financial year. Nonexecutive director fees were not increased during the year. The 0.5% increase in superannuation guarantee contributions effective 1 July 2021 was absorbed in existing entitlements by those AGL Energy employees paid on a fixed remuneration basis. The Board considers the outcomes for executives in FY '21 aligned with company performance and shareholder experience. The Board also implemented a number of changes to AGL's remuneration framework and reporting approach during FY '21 to deliver enhancements identified by proxy advisers and investors in relation to the FY '20 remuneration report. Those changes include the inclusion of specific targets and target ranges in relation to short-term incentive disclosures in the remuneration report to allow for a more complete assessment of performance over the financial year, the removal of the return on equity metric from the FY '22 long-term incentive plan given the challenges with establishing an appropriate range for the metric. The performance metrics included in the FY '22 plan are relative TSR performance, weighted to 75%; and carbon transition performance metrics, weighted to 25%. The Board determined that carbon transition metrics would remain in the LTI plan for FY '22 to ensure that the leadership team continues to focus on a responsible transition away from carbon-generated energy. Investors will recall that, in FY '20, an LTI bridging grant was issued to some executives to smooth the extension of the LTI testing period from 3 to 4 years. Again, in FY '21, we met our commitment that no executive would receive a windfall gain due to the bridging grant. To date, there have been 4 good leavers with bridging grants, and in every case, the Board has lapsed in full an LTI grant. A noteworthy event during the year was the resignation of Brett Redman, the former MD and Chief Executive Officer, in April after 15 years of service to AGL. In serving a full 6 months notice period and remaining available to AGL, Brett is treated as a good leaver. Brett will receive benefits in accordance with the terms of his agreement with the company and with AGL's incentive plans, retaining 2 prorated LTI grants upon cessation of his employment in October. Given the company's performance in FY '21, Brett did not receive any STI award in FY '21, and no performance rights vested in respect of his participation in the FY '19 LTI plan. The Board determined to appoint the existing Chairman, Graeme Hunt, as the Interim Managing Director and Chief Executive Officer of AGL to provide continuity of leadership in the period of uncertainty leading up to the potential demerger. Given the interim nature of the role, the Board determined that Mr. Hunt would not participate in AGL's short-term or long-term incentive plans. In lieu of any incentives, restricted shares valued at $600,000 were proposed to be allocated to Mr. Hunt. This level of reward was set with reference to the previous MD and CEO salary arrangements. When Mr. Hunt was appointed as the permanent MD and CEO of AGL, with effect from the 1st of July this year, the Board determined that it was appropriate for Mr. Hunt to participate in AGL's incentive plans for the current financial year FY '22 to ensure that his reward outcomes are set by and align with company performance. The Board then reduced the value of the restricted shares from $600,000 to $165,354 to reflect the period that Mr. Hunt acted on an interim basis without any incentive awards in place. Finally, I would like to discuss the approach to remuneration that is being applied in relation to AGL's proposed demerger. AGL has now identified a number of members of the executive teams for Accel Energy and AGL Australia, and we have disclosed the key remuneration terms for the Chief Executive Officers. The final remuneration structures for the new entities will be disclosed in the demerger scheme documents, expected to be released in the fourth quarter of FY '22. And I think that's probably a hint to, please, not ask me any questions about that because the answer will be that all of those details will be in the demerger booklet. The remuneration structures for the KMPs of the new entities were determined on a basis consistent with AGL's current practice to attract and retain the requisite leadership and skills and reward performance in line with long-term shareholder wealth creation while also having regard to company expectations and company performance. To assist the Board to determine the remuneration packages of the proposed KMP, independent advice was sought, and market benchmarking was undertaken to ensure that packages are contemporary and align with the overall business strategy and community expectations. Naturally, there was a level of judgment required to define the market to benchmark against. Overall, the Board believes that the remuneration packages agreed for the proposed KMP of the new companies reflect an appropriate level and mix of fixed and variable remuneration and are aligned with the strategy of each entity and ultimate company performance. Let me summarize. Your Board has listened to feedback from stakeholders regarding the 2020 remuneration report, and we believe that we have taken appropriate action during the course of FY '21 to address that feedback. The Board recommends that shareholders vote in favor of this resolution. I'll now hand you back to Peter.

Thank you, Diane. Thank you for that description. Liz, could you please let me know if there are any questions relevant to the resolution to -- about the 2021 remuneration report?

The first question on this resolution is from [ Stephen Mayne ]. The are 5 proxy advisers in the Australian market. We know that the ASA is recommending and voting against the rem report and the LTI grant for CEO Graeme Hunt. Have any other proxy advisers gone against the Board's voting recommendations today? And if so, please provide the details.

Thank you for your question, [ Stephen ]. Look, I -- there is overwhelming support for both the remuneration report and the grant of LTIs to Graeme in the voting, and that reflects the support of the various proxy advisers and -- for that vote. And I'm sure that we can provide and will provide details of the voting after the meeting.

The next question is from [ Adel Walsh ]. AGL management was unable to predict renewables rising and reducing the costs of electricity. Why are we rewarding them?

Well, the -- as Diane said, firstly, we're not basing our STI on criteria such as predicting renewables. And I should stress that we did predict and they did predict rising and reduce rising impact of renewables and also the reduction in price. Reality is today the STI for all our management or senior management has been reset in line with shareholder experience over the last 12 months, and Diane enunciated the reasons for that change.

There are no further questions on this resolution -- sorry, Chair. There's one further question that's just come in from Dan Gocher. In the STI, why is the carbon intensity measure not relative to the NEM average? AGL's carbon intensity is far higher than the NEM average and will likely remain so for the indefinite future.

Look. I -- there is no doubt that both AGL Australia and Accel Energy will look at appropriate remuneration targets for carbon intensity and other objectives that are required in that company based on strategy for carbon neutrality and benchmarks against those objectives. And on that basis, those Boards will set the appropriate STI and other remuneration targets for those companies should the demerger go ahead.

There are no further questions on that resolution.

Thank you, Liz. I'll now put the motion that the remuneration report of AGL for the year ended 30th of June 2021 as set out in the directors' report section of the annual report be adopted. Details of the proxy and direct votes that have been cast on this motion are as shown on the screen. And please place your online vote for this item if you have not already done so. [Voting]

Thank you very much. I now turn to the third item of business, which is the reelection of one Board-endorsed director and the election of a non-Board-endorsed candidate. In accordance with the company's constitution, 2 directors are retiring at this Annual General Meeting, John Stanhope and Jacqueline Hey. Jacqueline is seeking reelection. Also seeking election to the Board is Ashjayeen Sharif, who has nominated himself as a candidate for election. The first matter under this item of business concerns the reelection of Jacqueline Hey as a director. A short video will now play in which Jacqueline will outline why she is seeking your approval to continue as a director of your company. For our online meeting today, we thought it prudent for this address to be prerecorded to minimize disruption and the risk of technical issues.

Hello, ladies and gentlemen. I really appreciate you joining us today in this virtual mode. And I do thank you for giving me the opportunity to cover some relevant details of my career and background. I'm an economist by university training and have spent more than 20 years in the technology industry, ending up as managing director for entities both here, in Europe and in Middle East. During this time, I gained a lot of real-life leadership experience, particularly in governance and financials, in large intensive-capital projects, technology strategy, people safety and in customers and stakeholder management. Today, I have ASX Board roles with Qantas, and I'm the Chair of the Bendigo and Adelaide Bank. These roles enable me to identify best practices across industries and to apply those learnings to the benefit of AGL. I also serve as Chair of the AGL Safety, Customer & Corporate Responsibility Committee as well as being on the Audit and Risk Management Committee. Your company has a proud history, and presently it does operate in an industry which is experiencing substantial change. We must transform as the world we live and work in requires us to address generational, environmental and social issues; and to do it in a way that keeps the lights on, keeps our local communities in which we operate sustainable through this transition, allows our people to continue to be employed and, importantly, allows you as shareholders to be able to benefit in the future. This evolution means we are moving from an energy landscape built on baseload thermal power to a future of cleaner, more distributed energy generation and storage. It will require a well-considered and responsible approach to balance the needs of all stakeholders to make sure that no one group gets left behind and also that Australian households and businesses have continued access to reliable and affordable energy. Ladies and gentlemen, should you provide your endorsement, then I would be very honored to continue to fulfill my director role. I thank you for your consideration. Thank you.

Jacqueline has been a director since March 2016. She is considered by the Board to be an independent director. Ms. Hey enjoyed a successful executive career prior to becoming a full-time company director in 2011. Ms. Hey has extensive experience as a director of ASX-listed companies and is currently Chair of Bendigo bank and a Director of Qantas. Ms. Hey's skills and experience, particularly her commercial and leadership experience, are valuable to AGL's Board's existing skills and experience. Ms. Hey also adds considerable strength and leadership to the communities on which she serves, including as Chair of the Safety, Customer & Corporate Responsibility Committee. Therefore, the Board, excluding Jacqueline, recommends shareholders vote in favor of this resolution. Liz, could you please let me know if there are any questions relevant to the resolution to reelect Jacqueline Hey as a director?

Thank you, Chair. The first question is from [ Stephen Mayne ]. The current AGL constitution provides a range of between 3 to 10 directors. And there are no entrenchment provisions, making it difficult for external candidates to nominate for the Board. Will the Chair undertake to replicate these features of the constitution in the demerged company, avoiding following the lead of other demerged companies such as South32 and Treasury Wine Estates which had constitutions imposed without shareholder approval, requiring external candidates for the Board to be supported by 100 shareholders or 5% of issued capital?

Thank you for your question, [ Mr. Mayne ]. Look, the constitution of Accel and AGL Australia is subject to ongoing discussions. Your point and sensitivity is noted. And we will respond accordingly when we've got to decide, but your point is noted.

The next question is from [ Stephen Mayne ]. As the Chair of Bendigo and Adelaide Bank, could Jacqueline please comment on how much Australia's banks are moving to decline or reduce funding for carbon-intensive businesses like AGL? Is Bendigo a lender to AGL?

I can answer at least part of that question. I do not believe Bendigo is a lender to AGL. I will ask -- I can't speak on behalf of Jacqueline about Bendigo and Adelaide Bank's policies of lending, and I would anticipate that we -- I'll ask Jacqueline to respond accordingly to [ Stephen Mayne ] after this meeting.

There are no further questions, Chair.

Thank you, Liz. I will now put the motion to the meeting that Jacqueline Hey be reelected as a director of the company. Details of the proxy and direct votes that have been cast on this motion are shown on the screen. Please place your online vote for this item if you have not already done so. [Voting]

Thanks very much. The next matter for consideration is the election of Ashjayeen Sharif as a director. Mr. Sharif, a retail shareholder, nominated himself as a candidate for election, which was supported by another individual retail shareholder. A short video will now play in which Ashjayeen will outline why he's seeking your approval to be appointed as a director of your company. As with Jacqueline's address, we have prerecorded Ashjayeen's address to minimize disruption and the risk of technical issues.

My name is Ashjayeen Sharif. I'm 18 years old and I'm currently a student at the University of Melbourne. I may seem an unlikely candidate for the AGL Board, but I felt compelled to nominate myself because, while AGL is Australia's biggest climate polluter, it has the size, the scale and the scope to turbocharge Australia's energy revolution. I want to help steer AGL away from the coal-burning power that is destroying the climate and AGL's profitability and towards clean and reliable renewable energy in order to give my generation and all those to come a shot at a safe future. More than 18,000 people from all over Australia have signed a petition supporting my call for AGL to replace its coal-burning power stations with renewables by 2030. All of those people are calling on shareholders like yourselves to do the right thing for the next generation and for AGL as a business. The AGL Board has admitted that it failed to recognize the pace of change in the energy market. Renewables are taking the lead and AGL is not well placed to take advantage of the huge opportunities this presents. The failures of ADL's Board have cost shareholders over $12 billion in recent years, and AGL's share price has [ moved down ] 70% over the past 3 years alone. Financial markets are now moving at lightning pace towards climate action, leaving coal companies behind. AGL will struggle to gain financial support from banks, insurers and investors if it does not respond commensurately to the climate crisis. As the UN's Intergovernmental Panel on Climate Change and the International Energy Agency all advocate, we must transition away from coal by 2030 to maintain a safer, more livable climate future. It is as simple as that. With the right leadership, AGL can become a genuine renewable energy powerhouse and restore shareholder value to what it once was before the company began purchasing coal-burning power stations in 2012, so if you elect me to the Board, here are 5 key steps I would instruct AGL's executive team to deliver throughout the demerger process into Accel and AGL Australia. Firstly, I would push to fully commit to the Paris Agreement emissions reduction targets, including replacing Bayswater and Loy Yang A with renewables by 2030, providing certainty to the market. This importantly includes implementing transition plans for all workers at Bayswater and Loy Yang A, working closely with unions, relevant governments and other key local stakeholders to ensure AGL's hard-working workforce receive the job security that they deserve. Secondly, I would prioritize negotiations with our largest customer, Tomago Aluminium smelter, for ADL to provide renewable energy to as it transitions to mostly renewable power sources by 2029; and commence negotiations with Portland Aluminium Smelter to do the same. Thirdly, I would transform AGL's old power generation stacks to be the center of renewable energy industrial precincts using access to land, transmission lines and renewable energy resources as a major competitive advantage. Penultimately, I would position the company to be the preferred supplier of electricity to the rapidly growing list of major businesses who are making 100% renewable energy [ pledges ]. And finally, I would redirect sustaining capital that is currently going into upgrading worn-out coal-burning power stations, beyond 2030, into growth capital expenditure on new renewable energy production and storage projects. As Australia's biggest climate polluter, AGL has the power to become Australia's biggest climate solution by switching rapidly to renewable energy. I want to be a part of that solution. And I want to restore AGL to the great company that it once was and should still be for the sake of all staff, all shareholders and the future of the company and the world itself. Thus, I urge you to vote me onto the Board so I can deliver my plan. Thank you.

Thank you, Ashjayeen, for the video. The Board, assisted by the Nominations Committee, has carefully considered Mr. Sharif's nomination in the context of the succession planning it undertakes, the nonexecutive director succession; and is recommending that shareholders vote against Mr. Sharif's selection. As I mentioned previously, the Board is currently undertaking succession planning and is seeking to appoint a new director to the Board with specific skills and expertise in climate change and ESG in the first half of FY '22. Liz, could you please let me know if there are any questions relevant to the resolution to elect Ashjayeen Sharif as a director?

Thank you, Chair. The first question is from [ Henry K ]. "Instead of recommending that shareholders vote against the retail shareholder nominee, why don't you accept them on the Board as an interim director till the replacement is appointed?"

Thank you for your appointment -- your question, [ Mr. Kiad ]. The appointment of a Board member is a significant issue with broad ramifications. And reality is that we are in a very advanced stage to appoint directors -- a director and/or directors to AGL Energy and therefore absolutely not appropriate for us to appoint any interim director to that role. And we're proceeding as per our recommendation to putting on a range of skills which are necessary to drive both AGL Energy and, in the future, AGL Australia and Accel.

The next question is from [ Stephen Mayne ]. Could the proxy position be disclosed before the debate on each item rather than after, in accordance with the ASA best practice AGM guidelines? Did Mr. Sharif, the youngest-ever candidate for an ASX 100 Board, receive more than 2% of the proxy votes in favor?

Thank you, [ Mr. Mayne ], for your question. I can confirm that Ashjayeen received votes of just over 2% in support of his nomination.

Thank you, Chair. There's no further questions on that resolution.

I will now put the motion to the meeting, Ashjayeen Sharif be elected as a director of the company. Details of the proxy and direct votes that have been cast on this motion are shown -- as shown on the screen. Please place your online vote for this item if you have not already done so. [Voting]

Thank you very much. I now turn to the fourth item of business, which is the grant of performance rights under the long-term incentive plan in the 2022 financial year to the Managing Director and CEO, Graeme Hunt. The number of performance rights to be granted to Graeme is 2-9-7-3-7-4, 297,374, with a 4-year performance period. The number of performance rights that ultimately vests for Graeme will depend on the extent to which the performance conditions have been satisfied over the relevant performance period. AGL's FY '22 long-term incentive plan has 2 performance conditions. The first, weighted at 75%, measures AGL's total shareholder return relative to those of the constituent companies in the SP -- S&P/ASX 100 index being AGL's peer group. The second measure, weighted at 25%, is related to carbon transition, which was first introduced as an LTIP metric in FY '21. This metric has been included having regard to AGL's climate statement and AGL's commitment to reduce its carbon footprint and to facilitate the transition of AGL's generation fleet responsibly over time. We think this metric provides the focus for executives to deliver against AGL's commitment in its climate statement. Following feedback received on the FY '20 remuneration report and the ongoing challenge of establishing an appropriate target range for a return on equity metric, the Board determined not to include return on equity as a performance metric for FY '22 LTIP. The ASX listing rule required that shareholders approve the granting of performance rights to any director, including the Managing Director. The Board, excluding Graeme, recommends shareholders vote in favor of this resolution. Liz, could you please let me know if there are any questions relevant to the resolution to grant performance rights under the LTIP to Graeme Hunt?

There are no questions to this resolution, Chair.

Thank you, Liz. I'll now put the motion to the meeting to approve the grant of 297,374 performance rights to Graeme Hunt under AGL's long-term incentive plan for the year ending 30th of June 2022, on the terms set out in the explanatory notes which accompany the notice of meeting. And there are the proxy and direct votes for this item on the screen as we speak. Please pace -- place your online vote for this item if you have not already done so. [Voting]

Thank you. I now turn to the fifth item of business, which is the conditional spill resolution and will not be -- this will not be put to the meeting today given the company did not receive a second strike in relation to the 2021 remuneration report. Details of the proxy and direct votes that have been cast on this motion are now shown on this screen. So we now move on to item 6a. And item 6a concerns a special resolution proposing to amend AGL's constitution to include a new provision that would enable shareholders by ordinary resolution to express an opinion or request information about the way in which a power of the company vested in the Board has been or should be exercised. This resolution has been requisitioned under section 249N of the Corporations Act by shareholders representing approximately 0.02% of shares on issue in AGL. The Board has recommended that shareholders vote against this resolution. Detailed reasons are set out on Page 13 of the notice of meeting. The Board and company are committed to understanding the views of AGL's stakeholders and making a genuine effort to respond to concerns which are raised. The company considers that it has a proven track record of listening and responding to stakeholders' concerns and in a way that is cognizant of and balances the competing interests of its different stakeholder groups. The Board does not consider that the proposed constitutional amendment would enhance its ability to understand the views and sentiments of its shareholders and broader stakeholders. In addition, the Board is concerned that the proposed amendment to the constitution could have an effect of enabling groups of shareholders to promote their own interests which do not take into account the interests of the whole company. The resolution proposed is a special resolution. This means that it will be passed if at least 75% of the votes cast by shareholders are in favor of the resolution. The directors unanimously recommend that shareholders against these resolutions. Item 6b is an advisory resolution and will only be considered if Item 6a is passed by special resolution. The Board does not endorse item 6b and recommends that shareholders vote against it for the reasons set out in Pages 14 and 15 of the notice of meeting. Item 6b requests the Board's -- the Board disclose, in association with the forthcoming demerger scheme documents, short-, medium- and long-term targets for reductions in the proposed demerged companies; scope 1, 2 and 3 emissions that are aligned with Articles 2.1a and [ 4.1 ] of the Paris Agreement; details of how Accel Energy and AGL's capital expenditure, sustaining and growth and transformation, will align with the targets; and details of how Accel Energy and AGL Australia's remuneration policy will incentivize progress against targets. AGL understands the critical importance of decarbonization of the electricity sector. However, as mentioned earlier, AGL is not currently in a position to make Paris-aligned targets for scope 1, 2 and 3 emissions for Accel Energy and AGL Australia. I'll take questions on items 6a and 6b at the same time, so Liz, could you please let me know if there are any questions relevant to the special resolution?

In relation to resolution 6a, the first question is from [ Stephen Mayne ]. Why are Australian Boards so afraid of listening to the opinions of shareholders by way of nonbinding shareholder resolutions? These are standard practice in the U.S., yet dozens of ASX-listed companies have now recommended against these constitutional amendments. Did you consider supporting this move? And will you consider providing such resolutions in the constitution of Accel?

Well, again, [ Mr. Mayne ], thank you for your question. The constitution of Accel and AGL Australia are subject to review by the Board and eventually their respective Boards in the event of a demerger, and your point and sensitivities are noted and will undoubtedly be considered in those Board deliberations.

The next question is from [ Angela Meyer ]. The International Energy Agency and UN are both calling for Australia to transition away from coal power by 2030 in order to meet the Paris climate agreement goals. Does the Board and CEO acknowledge that the -- that 2030 is the firm target date for coal closure to ensure Paris alignment?

Thank you for your question, [ Ms. Meyer ]. We certainly recognize that the date of 2030 is something that is on the table with respect to the UN targets. And I believe that 2030 is a very, very challenging target for coal closure, based on the current pace of regulatory reform and the need for ongoing replacement of coal-fired generation within the NEM. As I mentioned earlier on, our targets and strategies with respect to the management of our coal fleet will be part of the scheme document that will be published in FY '22, and on that basis, further details of our approach to this will be given in those documents.

The next question is from Dan Gocher of the ACCR. The presentation on 30 June stated that AGL would disclose detailed climate change road map, including specific decarbonization targets for both demerged companies. Can the Chair confirm when this information will be made available to shareholders? Is this information not material to the demerger vote?

Thank you for your question, Dan. As we've said before, the reality is that we are working very hard on analyzing what the targets and appropriate business strategies will be for these organizations. And with further and great engagement with our shareholders and other stakeholders, the Board will appropriately publish those targets, including capital allocation and incentivization for meeting those targets, as part of a scheme document which will be published next year. I reiterate that that's a -- [ commitment remain inevitably for my mind ]. And the scheme document will be in part a mandate for shareholders to vote and be comfortable with the actions that -- and strategies that each company is taking towards the transition.

The next question is from [ Stephen Mayne ]. When disclosing the outcome of the Paris goals and targets resolution and all other resolutions today on your website, could you please advise how many shareholders voted for and against, similar to what happens with a scheme of arrangement? This will provide a better gauge of retail shareholder sentiment on all resolutions and was a disclosure initiative recently adopted by Metcash after its AGM.

Thank you for your question, [ Stephen ]. And we'll review that and revert accordingly. I -- we'll revert.

The next question is from [ Deborah Ann Sykes ]. Do you acknowledge that the UN and International Energy Agency say clearly that Australia has to stop burning coal by 2030 to address climate change? What are your plans to meet this target?

I've already said that [ our targets are ] subject to review right now and will be -- our strategy and objectives will be published as part of the scheme documents that will be published next year. Again we will work very closely with regulators and governments, both federal and state, to apply -- come up with the right answer that provides stability and cost competitiveness to the NEM. [ Our leading into such ] transition will be absolutely described in our scheme documents, and they're being worked on now.

The next question is from [ James Morgan ]. As a shareholder, it would seem that the Board is out of step, and the share price reflects this. The Board's obsession with coal is similar to Kodak's obsession with analog film. Resolution 6a may help AGL become more relevant. Can the Board indicate how it intends to address the shareholders' broader concerns?

Well, [ first ], the shareholders' concerns are reflected in their voting. And the shareholder votes are and will be published as part of this AGM. The reality is that the share price has got -- is -- reflects conditions and operating conditions of the day. They don't necessarily reflect a process which involves commitments to targets that are right now being reviewed, so on that basis, I think it's we have a different outlook. And the process of how we manage our coal-fired generation is one that is linked into the management of the whole NEM, and we can't be independently doing things that a -- regulations or -- and other commitments don't allow us to.

The next question is from Dan Gocher. If Australia's largest carbon emitter cannot align itself with the Paris Agreement, what chance does Australia have of doing the same?

Well, Dan, I think you will see what we will align to and commit to at the time of the scheme document publishing. We're clearly mindful of where that's going. And we're clearly mindful that this is an acceleration of -- an accelerating pace of expectations both from shareholders and investors, banks, et cetera. And that is part of our analysis as we develop the strategy for the scheme document and publishing the rationale for the demerger.

Thank you, Chair. There are no further questions on this resolution.

Thank you. I'll now put to shareholders item 6a, which deals with the proposed constitution amendment. Motion before the meeting is to amend the constitution to insert a new clause, 32.4, member resolution at the general meeting, as follows: The members in general meeting may, by ordinary resolution, express an opinion or request information about the way in which a power of the company partially or exclusively vested in the directors has been or should be exercised. However, such a resolution much -- must relate to an issue of material relevance to the company or the company's business and cannot either advocate action which would violate any law or relate to any personal claim or grievance. Such a resolution is advisory only and does not bind the directors or the company. Details of the proxy and direct votes that have been cast on item 6a are shown on the screen. Please place your online vote for item 6a if you have not already done so. Based on the proxy and direct votes received ahead of the meeting, it's apparent that item 6a for the amendment of AGL's constitution will not be passed. Therefore, item 6b, which is contingent on amending the constitution, will not be put to the meeting today. Details of the proxy votes that were received on item 6b are shown on the screen. As mentioned earlier, a poll is being taken on the relevant items of business. If you have not already done so, please indicate your votes for the resolutions via the online portal. A summary of the proxy votes I hold as a nominated proxy for shareholders in relation to each resolution are shown -- as shown on the screen. I advise the meeting that I intend to vote all discretionary votes available to me as Chair of the meeting in favor of resolutions 2, remuneration report; 3a, reelection of Jacqueline Hey as a director; and 4, grant of performance rights under the LTIP to Graeme Hunt; and against resolution 3b, election of Ashjayeen Sharif as a director; 6a, amendment of -- to the constitution; and 6b, Paris goals and targets. [Voting]

Ladies and gentlemen, that concludes the formal items of business for today's meeting. The polls will remain open for another 10 minutes. Results of the polling on each resolution put to the meeting will be provided to the ASX by close of business today and posted on the company's website. It only remains for me, on behalf of the Board, to thank you for attending and demonstrating your sincere interest in AGL by taking part in this meeting. I now declare the meeting closed, subject to conclusion of the poll. Thank you very much.