AGL Energy Limited (AGL) today released half-yearly financial results consistent with its revised full year earnings guidance of underlying net profit after tax1 (NPAT) of $330 million to $360 million.

NPAT for the half-year was $182.8 million compared with $195.6 million for the previous corresponding period. The decrease was due largely to increased interest expense. Operating EBITDA has grown by 14.1% to $471.3 million. Operating EBIT has also grown 14.9% to $372.9 million.

AGL has confirmed an interim dividend of 26 cents per share, fully franked. The company is on track to deliver FY08 EBITDA of $830 million to $875 million and underlying NPAT of $330 million to $360 million.

AGL's Merchant Energy business delivered an operating EBIT result of $238.9 million2, up 21% on the previous corresponding period.

The increase was driven predominantly by a 51% increase in earnings from power generation and energy trading which contributed operating EBIT of $145.1 million. This strong growth included contributions from the Torrens Island Power Station and Queensland generation and dispatch interests that were acquired in the 2007 calendar year. The electricity hedge book also performed very well and provided AGL with a competitive cost of goods sold in a highly volatile market.

AGL's Retail Energy business has recorded an operating EBIT of $134.8 million3, with an EBIT/Sales ratio of 6.3%4. This compares favourably with margins achieved in the previous corresponding period5 with the substantial increase in the low margin commercial and industrial load following the Powerdirect acquisition causing only a small dilution in margin.

Project Phoenix continues to deliver benefits with average operating cost per customer account falling 5.5%. In December, 1.3 million customers were successfully transferred to the new IT platform on schedule and with no systemic performance issues.

During the half-year, AGL continued to deliver on its integrated energy company strategy. AGL secured rights over additional gas haulage capacity from development of the QSN and Berwyndale pipelines, which will allow commercialisation of AGL's rights over Queensland coal seam gas reserves. Transactions to secure the rights to output from the Oakey, Yabulu and Condamine power stations will allow AGL to actively manage its exposure to wholesale electricity costs in Queensland. During the half-year AGL also acquired the North Queensland gas merchant business from Enertrade, committed to the development of a second wind farm at Hallett in South Australia and signed a heads of agreement with Meridian to explore the development of a wind farm at Macarthur in Victoria.

Commenting on the half-year results AGL Managing Director, Michael Fraser, said "These results confirm that AGL has a strong underlying business and is on track to deliver earnings of $330 million to $360 million for the full year, in line with previous market guidance. We have also made a number of significant steps in continuing to pursue the Company's integrated energy company strategy. AGL is well positioned to benefit from increasing demand for energy from renewable sources."

• Underlying NPAT guidance of $330 million to $360 million excludes significant items, fair value adjustments to hedging contracts and customer amortisation charges. The NPAT result of $182.8 million for the half year to 31 December 2007 includes customer amortisation charges of $11.6 million. Excluding these amortisation charges increases NPAT to $194.4 million, compared with $195.6 million for the previous corresponding period.
• Operating EBIT for Merchant Energy excludes significant items and fair value adjustments to hedging contracts.
• Operating EBIT for Retail Energy excludes significant items and customer amortisation charges.
  The EBIT/Sales ratio for the half year to 31 December 2007 has been calculated by adding customer amortisation charges of $11.6 million to EBIT of $134.8 million.
• EBIT/Sales ratio for the half-year ended 31 December 2006 was 6.6% after normalising full year FY07 operating EBIT to reflect a typical H1 vs H2 split of 57.5%/42.5%. As noted in the Appendix 4D, adjustments to unbilled revenue and network distribution charges made in H2 of FY07 had the effect of skewing full year results significantly in favour of H1 (with a H1 vs H2 split of 71%/29%).
• A webcast and conference call will be held today to discuss AGL's 2008 interim profit result.

Analyst & Media webcast via: http://www.agl.com.au/  or http://www.aglinvestor.com/

10.30am AEDT
Dial In numbers:
Toll Free Australia: 1800 148 258 (no PIN)
International Dial In: +61 2 8524 6650 (no PIN)

Further enquiries:

Media
Andrew Scannell
Media Manager
Direct: +61 3 8633 6167
Mobile: +61 (0) 407 290 658
e-mail:ascannell@agl.com.au

Analysts & Investors
Graeme Thompson, Head of Investor Relations
Direct: +61 2 9921 2789
Mobile: +61 (0) 412 020 711
e-mail: gthompson@agl.com.au

About AGL

AGL is one of Australia's leading integrated energy companies. Drawing on 170 years of experience, it includes retail and merchant energy businesses, power generation assets and an upstream gas portfolio. AGL has Australia's largest retail energy and dual fuel customer base. This includes customers supplied with gas and electricity through AGL's joint venture partnership with ActewAGL. AGL has a diverse power generation portfolio including base, peaking and intermediate generation plants, spread across traditional thermal generation as well as renewable sources including hydro, wind, landfill gas and biomass. One of Australia's largest renewable energy producers, AGL is looking to further expand this position by exploring a suite of low emission and renewable energy generation development opportunities.