#1AGL Energy FY17 Interim Results Half year ended 31 December 2016 9 February 2017 80 Any 2018 34 Disclaimer and important information The information in this presentation: Is not an offer or recommendation to purchase or subscribe for securities in AGL Energy Limited or to retain any securities currently held; Does not take into account the potential and current individual investment objectives or the financial situation of investors; and was prepared with due care and attention and is current at the date of the presentation. Actual results may materially vary from any forecasts (where applicable) in this presentation. Before making or varying any investment in securities in AGL Energy Limited, all investors should consider the appropriateness of that investment in light of their individual investment objectives and financial situation and should seek their own independent professional advice. Major expenditure remains subject to standard Board approval processes. Statutory Profit and Underlying Profit Statutory Profit is prepared in accordance with the Corporations Act 2001 and Australian Accounting Standards, which comply with International Financial Reporting Standards. Underlying Profit is Statutory Profit adjusted for significant items and changes in the fair value of financial instruments. Underlying Profit has been presented with reference to the Australian Securities & Investments Commission's Regulatory Guide 230 "Disclosing non- IFRS financial information" issued in December 2011. AGL's policy for reporting Underlying Profit is consistent with this guidance. The Directors have had the consistency of the application of the policy reviewed by the external auditor of AGL. Amounts presented as Statutory Profit/(Loss) and Underlying Profit are those amounts attributable to owners of AGL Energy Limited. 2 AGL Energy in action?' 9/2/2017 1#23 Results Highlights and Strategy Update Review of Operations and Financial Results Market Update and Outlook Andy Vesey Managing Director and CEO Brett Redman CFO Results Highlights and Strategy Update Andy Vesey Managing Director and CEO Andy Vesey Managing Director and CEO AGL Energy in action. 9/2/2017 2#3Improving safety outcomes year to date Total Injury Frequency Rate per million hours worked, employees 5 5.2 2.7 4.3 4.1 1.8 FY13 FY14 FY15 FY16 1H17 year to date AGL Energy in action Interim results: delivering on our strategy Five key areas of achievement 1. Strong result supports outlook > Statutory Profit after tax $325m > Underlying Profit after tax $389m, up 4%, driven primarily by wholesale electricity price and operating cost discipline > FY17 Underlying Profit after tax expected in upper half of $720-800m guidance range > Interim dividend 41 cents per share, in line with new dividend policy, up 9 cents 2. Transformation and productivity objectives on track 3. Progress on key uncertainties: Portland contract, industrial relations 4. Addressing key strategic imperatives: carbon and customer 5. Key growth and capital management initiatives under way 6 AGL Energy in action. 9/2/2017 3#4Imperatives and objectives framing our activity Strategic imperatives driving our agenda 7 Prosper in a carbon- constrained future Build customer advocacy Key objectives for strategy and decision-making From: mass retailing To: personalised retailing From: operator of large assets To: orchestrator of large and small assets From: high emissions technology To: lower emissions technology Strategic framework to enable delivery Embrace transformation Drive productivity Unlock growth AGL Energy in action. Strategic framework driving towards growth Embrace transformation Drive productivity First-half achievements Unlock growth 8 > AGL Macquarie enterprise agreement resolved > Ongoing rollout of Lean, Agile and scenario planning > Nyngan, Broken Hill asset sales > Continued progress on opex, working capital and sustaining capex reductions > PARF new build projects progressing > Launch of Customer Experience Transformation program > New Energy "innovation accelerator" > Resolve Portland smelter contract* >Resolve AGL Loy Yang enterprise agreement > Ongoing policy reform advocacy > Clarify rehabilitation position Second-half priorities > Complete Silverton asset sale* > Continuation of asset sale program > Completion of FY17 opex, working capital and sustaining capex reductions > Establishment of post FY17 productivity performance goals > Deliver first Signature Moments > Additional New Energy initiatives > Launch WA gas retail > Continue LNG import facility FEED *Executed in January 2017 AGL Energy in action 9/2/2017#5Recapping our key growth initiatives More advanced Less advanced PARF equity investments Customer Experience Transformation* Technology-led New Energy investments Western Australia market entry LNG import facility Large-scale peaking plant development Expand data-driven retail offering Developed markets offshore in retail transition * Previously referred to as Digital Transformation Program >Solar Flagships and Silverton now sold to PARF (total 355 MW) >350 MW Coopers Gap wind farm targeted for early FY18 financial close > $300m digitally enabled program underway > $22m spent to date; anticipated total FY17 investment of $75m >-US$7m of Energy Impact Fund investment called to date Virtual Power Plant ahead of key milestones > Licence application lodged and gas supply agreements pending > Anticipated Underlying EBIT impact: FY18 $(15)m; FY19 breakeven > Potential $200-300m development pending decision in 2018-19 > Currently assessing potential sites; selection expected mid CY17 > Develop additional gas-fired and/or battery plant peaking capability > Highly contingent on market conditions and policy settings > Growing orchestration and technology/data capability provides opportunities to expand range of customer services > Opportunity to expand core where risk profile and market type are consistent with existing business 9 Transforming the customer experience Progress report on milestone $300m program 10 Ramp-up phase Benefits delivery Initial uplift of core systems Enhancement of key digital platforms: e.g. MyAccount portal, mobile app Enablement of anytime customer access Increased back-end automation, including system monitoring More personalised digital experience Ongoing development of Foundational Capability via investment in people, processes and technology Digital Adoption and Signature Moments to drive channel mix shift to digital, churn reduction and customer growth Operating cost reductions and customer growth deliver gross margin uplift Project's nominal post tax IRR: 12%+ Investment to date: $22m Further $225m investment applying agile methodology Total FY17 forecast investment: $75m FY17 FY18 FY19 AGL Energy in action AGL Energy in action?' 9/2/2017 5#6Accelerating innovation at AGL New Energy progress scorecard Key initiative Connected home and digital apps Details Solar Command 1.0 launched: real- time solar performance monitoring $6m expense incurred including investment in Solar Analytics 1H17 output 4,250 Solar Command customers signed up to market testing pilot Next steps Develop, scale and iterate subsequent products (e.g. Solar Command 2.0) Residential storage and orchestration 5 MW Virtual Power Plant launched Leverages US$20m Sunverge investment 175 packages sold and 31 installed to date (ahead of target) under pilot program 1,000 connected customers and 5 MW controllable load by end FY18 Learn and iterate proven concept Energy Impact Partners US$50m AGL investment commitment Portfolio to date: AutoGrid, Sense Labs, OpusOne 11 -US$7m of AGL US$50m commitment called to date Identification of further targets for EIF investment and/or AGL acquisition Review of Operations and Financial Results Brett Redman CFO AGL Energy in action 9/2/2017 60#7Strong performance supports dividend uplift Solid profit growth; cash flow impacted by working capital movements 13 1H17 1H16 Change Statutory Profit/(Loss) after tax ($m) 325 (449) ↑172% Underlying Profit after tax ($m) 389 375 ↑4% Statutory EPS (cents) 48.2 (66.5) 172% Underlying EPS (cents) 57.7 55.6 ↑4% Statutory operating cash flow after tax ($m) 471 658 ↓28% Underlying cash flow from operations ($m) 699 866 19% Dividend per share (cents) 41 32 28% Return on equity (%, rolling 12 months) 8.9 7.9 1.0 pts AGL Energy in action Underlying Profit after tax up 4% to $389m Wholesale Electricity and Eco Markets positively offset gas headwinds ($m) Energy Markets Group Operations Central activities 14 375 1 (14) 58 1H16 Customer Electricity gross margin Customer Gas gross margin Wholesale Electricity gross margin (72) 33 2 (6) 5 (2) 11 (19) 389 17 Wholesale Eco Markets Opex and Thermal & Gas gross gross margin New Energy Renewables margin Services Other Investments Centrally Net Managed Borrowing Expenses Costs Income Tax 1H17 AGL Energy in action?' 9/2/2017 7#8Electricity: lower generation and sales volumes Lower sales volumes driven by mild winter weather Comparison of volumes (TWh) 1H16 Generation Sales 1H17 Generation Sales Generation volumes down 0.4 TWh Greater planned outage days at Bayswater Partly offset by reduction in forced outages at Liddell 15 7.6 7.0 5.8 6.4 22.6 22.2 Consumer customer sales volumes down 0.6 TWh Mild July/August weather - Lower average customer numbers Business customer sales volumes down 0.6 TWh Strategic customer acquisition and retention within competitive market 5.9 5.0 Wholesale customer volumes sales up 0.9 TWh - Higher commercial load 3.6 3.5 Spot pool sales and generation losses broadly flat AGL Energy in action Electricity: margin driven by wholesale price Strong physical portfolio delivering broadly flat generation costs 16 Comparison of gross margin ($m) 1H16: $630m 1H17: $730m 244 244 17- 29 18 60 772 714 Consumer customers electricity margin flat Lower volume offset by disciplined and effective price management -Increase in wholesale prices passed through Business customers electricity margin up $1m - Tight discipline to pass through rising wholesale prices Eco Markets electricity margin up $31m Higher wholesale market prices for LGCs Wholesale electricity margin up $58m - Fuel costs steady benefitting from long-term position Phased pass-through of higher wholesale market prices to Consumer and Business customers (374) (364) Group Operations (Thermal & Renewables) electricity margin up $10m Generation running costs flat reflecting cost discipline AGL Energy in action?' 9/2/2017 8#9Gas: higher sales volumes Higher AGL Torrens generation and business customer acquisitions Comparison of gas volumes (PJ) 17 1H16: 122.2 PJ 33.8 1H17: 130.7 PJ 33.4 39.1 36.8 58.2 51.6 Consumer customers down 0.4 PJ - Warmer winter weather in July and August Business customers up 2.3 PJ - New customer acquisitions Wholesale Markets & Generation up 6.6 PJ -Increased generation from AGL Torrens AGL Energy in action Gas: lower margin in line with guidance Driven by Queensland wholesale sales, supply curtailment impact 18 Comparison of gross margin ($m) 1H16: $439m 1H17: $355m Consumer customers gas margin down $21m Increased commodity costs and increased discounting 171 Business customers gas margin up $7m 150 Rates benefited from supply-constrained market 31 1 38 3 236 164 49 Eco Markets gas margin up $2m Victorian Energy Efficiency Target compliance liability Wholesale gas margin down $72m $1/GJ lower Queensland gas sales margin - Higher commodity costs driven by supply curtailments and increased AGL Torrens demand AGL Energy in action?' 9/2/2017 6#10On track for targeted $170m opex reduction Real operating expenditure savings of $38m delivered in 1H17 ($m) CPI increase Impact in 1H17: $18m Remaining FY17 forecast: $16m Cost reductions Achieved in 1H17: $38m Remaining FY17 target: $10m 19 10 (4) 1,460 36 (122) 1,380 34 2H16 actual: 659 1H16 actual: 721 15 (48) 1,381 2H17 Reclassification increase target: 675 Impact in 1H17: $5m Remaining FY17 forecast: $10m 1H17 actual: 706 FY15 Normalised CPI M&A Reclassification Reduction FY16 CPI M&A Reclassification Reduction FY17 Actual Target Key consumer metrics Lower volume partly offset by cost discipline AGL Energy in action 1H17 1H16 Change EBIT per customer ($) Average consumer accounts ('000) 3,668 3,708 ↓(1%) Cost to serve per consumer account $36 $37 ↓(3%) Cost to grow per account acquired/retained $82 $95 ↓(14%) 54 54 52 52 Gross margin per consumer $107 $112 ↓(4%) 43 account 37 Net operating costs per $56 $58 ↓(3%) consumer account Net operating costs/gross margin ratio 51.8% 51.8% 1 1H14 1H15 1H16 1H17 20 AGL Energy in action?' 9/2/2017 10#11Working capital impact on cash flow > Movement in futures margin calls to be offset by future benefit of rising wholesale prices > Receivables impacts largely timing related including early collections in 2H16 reducing 1H17 > Objective for $200m reduction in underlying working capital remains on track (see slide 45) ($m) Receivables Creditors Inventories Net derivative premiums Futures margin calls Net movement in green assets and liabilities Other Total working capital movements 21 1H17 105 1H16 226 (205) (196) 87 31 (25) (35) (112) (24) 9 8 (31) 8 (172) 18 Sustainable cash position remains strong AGL Energy in action ($m) 1H17 1H16 Commentary Operating expenditure (706) (721) Significant reduction in 1H17; on track to achieve $170m real reduction target in FY17 Underlying EBITDA 924 885 Consistent with Underlying Profit growth EBITDA/cash conversion Underlying cash flow from operations 699 76% 98% Short-term impacts from negative movements in working capital Interest paid (84) Tax paid (144) Sustaining capital expenditure* (135) Dividends paid (243) Cash available 93 Disposals* 260 Acquisitions/investments Growth capital expenditure* Share buy-back (18) (93) (51) * Shown on accruals basis 22 (96) Reduction driven by short-term working capital impact Reduction due to lower average net debt Higher tax payment due to asset sales (204) Significant reduction in 1H17, on track to achieve $315m target in FY17 ༔ ༔ ཆེ ® ༔ 8 བྷུ ལྷ ༤ གླུ ་ (230) 245 532 (89) FY16 final dividend of 36 cents per share paid in September 2016 Reduction driven by short-term working capital impact Sale of Solar assets in November 2016 Investments in PARF and Energy Impact Fund FY17 forecast: $240m driven by metering and Customer Experience Transformation On-market share buy-back of 0.4% of issued share capital to date AGL Energy in action?' 9/2/2017 11#1224 23 Balance sheet and liquidity position Strong liquidity enabling capital management strategy Debt maturity profile (at 9 February 2017) > Cash balance of $969m at 31 December 2016 700 > Net debt $2.6b, down $154m during 1H17 600 > Debt headroom - $2b 500 Moody's Baa2 credit rating, stable outlook 400 > $500m of Syndicated Term facility repaid February 2017 300 > Revolving facility maturing FY17 to be refinanced with September 2020 maturity 200 > On-market share buy-back to continue 100 0.4% of issued share capital acquired to date 0 Further 4.6% of issued capital can be acquired to October 2017 FY17 FY18 FY19 FY20 FY21 FY22 ■Drawn Bank Debt ■Bond Debt FY23 FY24 FY25 FY26 FY27 Update on rehabilitation review process Anticipated completion in time for FY17 results FY28 FY29 FY30 FY31 FY32 Undrawn Bank Debt Current status Review underway as part of periodic assessment of rehabilitation options and costs: - Third-party assessment of all relevant sites - AGL review of third-party findings - Financial modelling of potential rehabilitation options By end FY17 Outline community engagement and consultation strategy AGL Board review of recommendations Finalise financial modelling Financial impact FY17 balance sheet: corresponding non-cash adjustment in provision balance and asset value FY18 onwards income. statement: any change in provision and asset balance to affect depreciation charge and non-cash interest expense AGL Energy in action AGL Energy in action 12 9/2/2017#1326 Market Update and Outlook Andy Vesey Managing Director and CEO Electricity: well positioned for rising curve Pass-through of market prices varies according to segment 15.7 FY16 contracted sales volumes 39.6 TWh 12.3 11.6 Consumer customer sales Pricing changes occur annually by state Impact phased over time due to competition, customer affordability Business customer sales Contracts typically last two to three years Wholesale customer sales Small number of large contracts up to 11 years in length Hedge book typically refreshes every two to three years AGL Energy in action?' 13 13 9/2/2017#1428 Customers (millions) Millions 27 Gas: multiple options to strengthen supply Portfolio development to respond to dynamic, volatile market > Expectation remains for at least $100m Underlying EBIT impact on gas margin in FY17 from reduced Queensland gas margin, supply curtailment and other issues > Progress in FY17 to date to further strengthen AGL's supply portfolio: Flexible transportation arrangements executed with Epic and APA during 1H17 enable bi-directional gas movement, supporting AGL to meet household and generation demand Binding heads of agreement with Cooper Energy's Sole project signed January 2017 expands supply by 12 PJ from CY19, pending project final investment decision Continued domestic engagement to source further competitive supply and leverage flexibility provided by strengthened storage position Feasibility study for LNG import terminal progressing; expected selection of final site mid CY17 AGL Energy in action Customer retention despite competitive market Sales and retentions 1.0 0.8 0.5 0.3 Consumer churn (AGL vs. rest of market) 22% 20% Dec-14 Dec-15 Dec-16 ■Total Sales Total Retentions 18% Loyalty and reward programs membership 1.8 1.5 1.3 1.0 0.8 0.5 0.3 Dec-14 Dec-15 Dec-16 16% 14% June Dec Jun Dec Jun FY14 FY15 FY16 Dec FY17 --AGL Rest of market Source: Retail Transfer Statistical Data, Australian Energy Market Operator AGL Energy in action?' 14 9/2/2017#15On track to deliver FY17 guidance 29 Underlying Profit after tax expected to be in the upper half of $720-800m guidance range, subject to normal trading conditions > Electricity: impact of rising wholesale prices expected to continue Forward curve points to sustained improvement Impact phased over time due to competition, customer affordability and timing of contracted positions > Gas: headwinds as previously flagged Lower margin on rollover of Queensland wholesale contracts, mild July/August weather and supply issues Resulting in $84m lower first-half gas margin; at least $100m lower margin FY17 vs. FY16 > Discipline around cost and price management to continue Supplementary Information AGL Energy in action. 9/2/2017 15#16Reconciliation of Statutory to Underlying Profit ($m) Statutory Profit/(Loss) Adjust for the following after tax items: Significant items Restructuring costs 1H17 1H16 Change 325 (449) 774 31 16 (16) Natural Gas impairments 640 (640) Changes in fair value of financial instruments Underlying Profit 64 168 (104) 389 375 14 Underlying Profit summary ($m) Revenue Underlying EBITDA Underlying EBIT 32 AGL Energy in action. 1H17 1H16 Change 6.030 5,601 8% 924 885 4% Energy Markets 1,214 1,191 2% Group Operations (416) (429) (3%) Investments 11 17 (35%) Centrally Managed Expenses (124) (129) (4%) Total Underlying EBIT 685 650 5% Less: net finance costs (116) (114) 2% Underlying Profit before tax. 569 536 6% Income tax expense (180) (161) 12% Underlying Profit after tax 389 375 4% Underlying EPS (cents) 57.7 55.6 4% AGL Energy in action?' 9/2/2017 16#17Energy Markets - Underlying EBIT ($m) Underlying EBITDA Depreciation and amortisation Customer EBIT 1H17 1,261 (47) 230 230 Consumer Electricity gross margin 244 Consumer Gas gross margin 150 Business Electricity gross margin 18 Business Gas gross margin 38 Net operating costs (220) Wholesale Markets EBIT 985 Electricity gross margin 772 Gas gross margin 164 Eco-markets gross margin 63 Net operating costs (14) New Energy Services EBIT (1) Gross margin Net operating costs Underlying EBIT 5 (6) 1,214 ཙྪཱཙྩཊྛིཧྨཡྻངྐ ༤ དྷ8gཎྜ8 8 ཛྱཱ॰ ཛིཨྰ 1H16 Change 1,240 2% (49) (4%) 244 171 (12%) 17 6% 31 23% (233) (6%) 966 2% 714 8% 236 (31%) 110% (80%) (17%) (11) (45%) 1,191 2% 33 AGL Energy in action Group Operations - Underlying EBIT ($m) Underlying EBITDA Depreciation and amortisation Thermal 1H17 1H16 Change (236) (259) (9%) (180) (170) 6% (346) (338) 2% Renewables (18) (37) (51%) Natural Gas (26) (27) (4%) Other Operations (26) (27) (4%) Underlying EBIT (416) (429) (3%) 34 AGL Energy in action?' 9/2/2017 17#18Reconciliation of EBITDA to cash flow 35 ($m) Underlying EBITDA Equity accounted income Onerous contracts 1H17 1H16 924 885 (12) (15) (20) (22) Gain on divestment (21) Working capital movements (172) 18 Underlying operating cash flow before interest and tax 699 866 Net finance costs paid (84) (91) Income tax paid (144) (96) Underlying operating cash flow 471 679 Cash flow relating to significant items (21) Statutory net cash provided by operating activities 471 658 Investing cash flow - 212 Financing cash flow 246 (1,023) Movement in cash and cash equivalents 717 (153) Cash conversion ratio 76% 98% AGL Energy in action Debt facilities at 31 December 2016 Debt facility ($m) Syndicated revolving facility Limit Usage Maturity 400 Jun-17 Syndicated term facility¹ 650 650 Feb-18 Revolving bilateral facility 150 Dec-19 Club facility term 410 410 Jun-21 A$600m medium-term notes 600 600 Nov-21 USPP US$165m 186 186 Sep-22 USPP US$135m 152 152 Sep-25 USPP A$50m 50 50 Dec-26 CPI bonds 164 164 May-27 USPP US$150m 198 198 Dec-28 USPP US$70m 93 93 Dec-29 ECA Macarthur amortising facility 161 161 Jun-31 USPP US$175m 231 231 Dec-31 Subordinated notes² 650 650 Jun-39 Total debt facilities 4,095 3,545 Less: cash¹ 969 Net debt 2,576 1. 36 On 8 February 2017, $500m of cash was utilised to repay a portion of the Syndicated term facility, reducing the balance of the facility to $150m. 2. The first call date on the Subordinated notes is 8 June 2019. AGL Energy in action?' 9/2/2017 18#19Electricity sales volumes 37 GWh 1H17 1H16 Change Consumer New South Wales 2,792 3,002 (7%) Victoria 1,812 1,928 (6%) South Australia 1,157 1,406 (18%) Queensland 1,262 1,284 (2%) Consumer total 7,023 7,620 (8%) Business New South Wales Victoria South Australia Queensland Business total Wholesale total¹ Electricity sales volume total 1. Includes purchased volumes sold to ActewAGL during 1H17 of 1,599 GWh (1H16 1,343 GWh) Gas sales volumes 38 2,346 2,020 16% 1,649 2,050 (20%) 1,100 1,326 (17%) 710 1,043 (32%) 5,805 6,439 (10%) 5,880 4,999 18% 18,708 19,058 (2%) AGL PJ 1H17 1H16 Change Consumer New South Wales 10.8 11.7 (8%) Victoria 19.1 18.9 1% South Australia 2.1 1.8 17% Queensland 1.4 1.4 Consumer total 33.4 33.8 (1%) Business New South Wales Victoria South Australia 13.2 12.3 7% 14.5 12.0 21% 1.7 2.4 (29%) Queensland 9.7 10.1 (4%) Business total 39.1 36.8 6% Wholesale Customers & Generation¹ 58.2 51.6 13% Gas sales volume total 130.7 122.2 7% 1. Includes volumes sold to Torrens Island and Diamantina power stations during 1H17 of 23.6 PJ (1H16 22.1 PJ) AGL Energy in action. Energy in action?' 9/2/2017 19#20Customer numbers 39 (*000) Consumer Electricity New South Wales 31 Dec 2016 30 Jun 2016 Change 811 808 3 Victoria 637 636 1 South Australia 398 408 (10) Queensland 401 395 6 Total Consumer Electricity 2,247 2,247 Consumer Gas New South Wales Victoria 666 674 (8) 536 533 3 South Australia Queensland 132 132 80 79 1 Total Consumer Gas 1,414 1,418 (4) Total Consumer accounts 3,661 3,665 (4) Total Business Customer accounts 16 16 - Total Customer accounts 3,677 3,681 (4) Dual fuel accounts 1,971 1,962 9 Consumer Market key indicators Electricity AGL 1H17 1H16 Change Volume (GWh) 7,023 7,620 (8%) Average Consumer accounts ('000) 2,250 2,260 (0%) Revenue ($m) 1,897 1,980 (4%) Gross margin ($m) 244 244 Gross margin 12.9% 12.3% 0.6 pts Gross margin per customer ($) 108 108 Gross margin per MWh ($) 34.7 32.0 8% Gas Volume (PJ) 33.4 33.8 (1%) Average Consumer accounts ('000) 1,418 1,447 (2%) Revenue ($m) 755 756 (0%) Gross margin ($m) 150 171 (12%) Gross margin 19.9% 22.6% (2.7 pts) Gross margin per customer ($) 106 118 (10%) Gross margin per GJ ($) 4.49 5.06 (11%) 40 Energy in action AGL Energy in action?' 9/2/2017 20#21Business Market key indicators 1H17 1H16 Change Electricity Volume (GWh) 5,805 6,439 (10%) Revenue ($m) 775 826 (6%) Gross margin ($m) 18 17 6% Gross margin 2.3% 2.1% 0.2 pts Gross margin per MWh ($) 3.14 2.72 15% Gas Volume (PJ) Revenue ($m) Gross margin ($m) Gross margin Gross margin per GJ ($) 41 Generation portfolio 39.1 36.8 6% 290 268 8% 38 31 23% 12.8% 11.6% 1.2 pts 0.97 0.84 15% AGL Energy in action. Asset State Туре Status Capacity (MW) Carbon intensity (tCO₂e/MWh) 1H17 sent out generation (GWh) Bayswater NSW Coal Owned 2,640 0.94 7,715 Liddell NSW Coal Owned 2,000 0.94 4,888 Loy Yang A VIC Coal Owned 2,210 1.28 7,135 Total coal 6,850 19,738 Torrens Island SA Gas steam turbine Owned 1,280 0.62 1,375. Yabulu QLD CCGT Controlled dispatch 122 0.51 112 Somerton VIC OCGT Owned 160 1.04 11 Other Various Gas/diesel Various 88 0.71 161 Total oil and gas 1,650 1,658 Macarthur VIC Wind Controlled dispatch 420 0.00 542 Hallett SA Wind Controlled dispatch 350 0.00 582 Wattle Point SA Wind Controlled dispatch 91 0.00 118 Oaklands Hill VIC Wind Controlled dispatch 63 0.00 102 VIC hydro VIC Hydro Owned 734 0.01 489 NSW hydro NSW Hydro Owned 54 0.00 32 NSW solar NSW Solar PARF 156 0.01 174 Other Various Landfill and bio-gas Various 47 0.09 80 Total renewables 1,915 2,119 Generation portfolio at 31 December 2016 10,415 0.94 23,515 NEM industry average 0.87 Note: the difference between sent out generation of 23,515 GWh and pool generation volume of 22,205 GWh (as disclosed in the Operating and Financial Review) is due to marginal loss factor. nonscheduled generation and auxiliary usage. 42 AGL Energy in action?' 9/2/2017 224 21#22Breakdown of FY17 opex saving target: $170m ($m) Group Operations Maintenance optimisation Procurement Labour and contractor Other Additional generation 1H17 actual FY16 and 1H17 actual FY17 target 7 55 77 3 23 29 1 19 29 2 15 13 1 4 6 Energy Markets Labour and contractor Campaign and channel costs Other Centrally Managed Expenses Labour and contractor IT contract costs Insurance Other Total operating cost savings achieved/targeted 43 16 (6) 26 68 8 23 7 15 11 30 1182 80 66 14 32 20 9 3178 51131 20944 37 27 13 10 70 170 60 38 160 AGL Capital expenditure targets update 395 Sustaining capex ($m) $100m reduction less CPI 390 FY17 growth capex forecast ($m) 44 915 315 2H17 target: 240 180 1H17 actual: 135 FY15 Normalised FY16 FY17 Actual Target FY17 Growth Capex Energy in action ■LNG Import Facility Natural Gas ■ PARF New Energy ■Metering ■Customer Experience Transformation and Other AGL Energy in action?' 9/2/2017 22 22#23Working capital targets update ($m) Optimise coal stockpile at AGL Macquarie Excess gas bank to be naturally consumed 1H17 actual FY16 and 1H17 actual 12 33 83 66 99 Reduce surplus large scale generation certificates and other green assets Consumer credit and billing initiatives Total working capital reduction 45 FY16 and FY17 target 42 21 21 12 12 40 64 (51) (11) 81 56 128 28 Queensland wholesale gas Firm Queensland wholesale gas customer sales PJ 46 70 60 50 40 30 20 10 208 AGL Energy in action. 0 FY16 FY17 FY18 FY19 AGL Energy in action?' 9/2/2017 23 23#24Wholesale contracting AGL's Wholesale Markets Risk Management Policy (Policy) is approved by the Board and establishes the requirements for managing risks arising from wholesale energy markets. The Policy clearly defines permitted contracting activities, limits and counterparty credit management requirements. Limits for exposure to market price risk are in place to manage profit, cash flow and dividends. Activities to monitor exposure include: > Electricity: retail load, generation, contracts monitoring; earnings-at-risk simulation analyses, limits and stress testing of the portfolio. > Gas and oil: position monitoring of contract exposures, production risks and customer demand. The aspects of the gas portfolio exposed to oil price risk is managed using sensitivity and stress test analyses in conjunction with limits. > Environmental: position monitoring of contract exposures, production risks and customer demand. Electricity hedged positions (all regions) FY17 FY18 FY19 FY20 Average Cover (Net) -Forecast average customer demand (consumer plus contracted commercial and industrial) 47 Contact information James Hall General Manager, Capital Markets phone: +61 2 9921 2789 mobile: +61 401 524 645 email: [email protected] Nicole Rizgalla Investor Relations Manager phone: +61 2 9921 2691 mobile: +61 400 488 836 email: [email protected] AGL Energy in action agl.com.au 131 245 Download the app Blathnaid Byrne Group Treasurer phone: +61 2 9921 2255 mobile: +61 424 644 947 email: [email protected] Community f You Tube agl.com.au/community facebook.com/aglenergy twitter.com/@aglenergy youtube.com/aglenergy 48 AGL Energy in action 9/2/2017 24 224#25AGL Energy FY17 Interim Results Half year ended 31 December 2016 9 February 2017 79 Any 2018 80 34 9/2/2017 25 25