8 Effective engagement with our  customers, our employees, and  our local communities is crucial  to our success. New South Wales Retail Market AGL posted a small increase in underlying profit to $431.1 million,  in line with our revised earnings guidance which followed the severe  weather events experienced in late January and early February.  A heat wave in South Australia, Victoria and New South Wales meant  that simultaneously high temperatures in Adelaide, Melbourne and  Sydney created record levels of customer demand for electricity.  This demand combined with the effects of the Queensland floods  and Cyclone Yasi led to a period of high wholesale electricity prices,  significantly increasing the costs to AGL of meeting customers’  demand for electricity. As a result, AGL informed the market that  underlying profit for the year would be approximately $30 million  to $35 million lower than had previously been anticipated. Overall, the underlying strength of the business was demonstrated  by the continued improvement in our cash-flow, highlighting our  disciplined approach to capital expenditure and the strength of our  balance sheet. AGL participated in the sale process for the New South Wales  electricity assets, which included the Energy Australia, Country  Energy, and Integral Energy retail businesses. After completing  extensive due diligence, we concluded that the price we would  have needed to pay to acquire one of the retail businesses would  not have represented value for our shareholders. Instead, we have  chosen to pursue a strategy of growing our electricity customer  base organically. Early results have been very encouraging with around 100,000  new electricity customers already signed up since we launched our  campaign urging New South Wales consumers to ‘Switch to AGL  and Save’. This campaign aims to build awareness in New South  Wales of the customer benefits that can be enjoyed and the savings  that can be achieved by switching to AGL. AGL has also launched ‘AGL Energy Online’, to provide an easy and  convenient way for consumers and businesses to sign up with AGL  and to manage and pay their energy accounts online. The new online  initiative is already proving to be very popular with many new and  existing AGL customers. Managing  Director’s  Report